Israel High Court Splits Disputed $500M Rail Power Contract
Israel's Supreme Court has resolved a major dispute in that country over government award of a $500-million rail-electrification contract to Spain's Sociedad Espanola de Montaies (SEMI), requiring the winner to share the award with France's Alstom and its Israeli partner Afcon.
Alstom and Afcon had appealed the initial award, announced by Israel Railways in June 2016, to the country's highest court, arguing that it be annulled.
The contract is for 420 kilometers on 13 lines and covers more than 60% of Israel Railways' existing and planned network. It includes the supply of 14 substations and control systems for 25-kV, 50-Hz power supply that will be supplied by overhead catenary.
The project is part of Israel Railways' overall $3-billion electrification program, which includes related infrastructure and new electrical locomotives designed to convert most of the state-owned company's interurban network from diesel to electricity.
Work is already underway on the new high-speed Tel Aviv-to-Jerusalem line, which will be the first to operate on electricity. The 56-km, $2-billion line now is set for completion in March 2018.
Under the terms of a court-ordered compromise agreed to by the parties, Afcon will serve as subcontractor and Alstom will be awarded 50% of the maintenance work for the 23-year life of the contract.
Israeli transport industry sources said that Alstom was forced to lower its initial bid after initially arguing that the SEMI bid was unrealistic. The sources added that the new arrangement is expected to increase the cost of the overall project by about $40 million.
At the time of the award, Israel Railways said that the Spanish company's bid was substantially lower than those of other competitors in the final round. The competitors included Alstom, Siemens, Elecnor and China Railways Construction Corp.
Train ridership has been rising rapidly in recent years, has increased by 50% since 2014. It is expected to top 63 million passengers in 2017. Two new lines have been opened in the past two years from Beer Sheba to Ashkelon in the south and from Haifa to Beit Shean in the northern Galilee region.