TRANS-ISRAEL PIKE:Derech Eretz given Jan 99 deadline

The Derech Eretz consortium selected to build the major Trans-Israel Highway has been given a final 3-month deadline to raise the necessary money. Government and consortium spokesmen traded harsh words in the Israeli press this month over the badly delayed project.

Arieh Shabtai, spokesman of Cross-Israel Highway Ltd (CIHL), the government agency managing the franchise, told the

JERUSALEM POST Oct 23: “We are giving them an extra three months. If we don’t conclude with them by then, we’ll go to someone else.”

Shabtai said that until there is a signed contract and funding “there is nothing at all” by way of a contract.

Derech Eretz chief Ehud Savion said he would, in that case, take CIHL to court. He said he already had a contract with the government of Israel signed by prime minister Netanyahu. He added that if negotiations were cut off by CIHL then “there will be no road.” Despite this adversarial talk Savion told the leading local newspaper that that the money would be raised even in the face of what he called a “very deep world financial crisis.”

Derech Eretz is led by a large Israeli developer Africa Israel Investments and Canadian Highways Internat Corp and comprises the French SGE bank, the investor-owned Cofiroute of France and four smaller Israeli companies. Hughes/Raytheon has been variously in and out of the project as an equity holder but is due to provide the toll system.

The “someone else” who might get the road concession is the runner up in the selection process Israel Transport Ventures led by Transroute International (the French public toll companies’ international arm), three large Israeli companies, Atkinson (California) and Balfour-Beatty (UK).

Derech Eretz was chosen as the preferred concessionaire for the $750m 86km long toll road in January this year. A detailed concession agreement was negotiated prior to the selection so it was then hoped that the financial closing would be complete by May or June, with work starting in September or October. The first section was due to open Sept 00 with the whole project finished by Dec 02.

Reportedly there have been serious disputes among the consortium partners and also with the CIHL government agency, and it remains to be seen whether these problems can be overcome.

We were told early this year (TRnl#24 Feb 98 p6) that the final contest between Derech Eretz and ITV was “quite close” but that the better toll levels and financial strength of the Derech Eretz won it the selection.

A great deal of the future of Canadian Highways (CHIC) hinges on the successful launch of the Israeli toll road, as it is by far the largest project it has got after the 407-ETR in Toronto. CHIC president John Beck has invested great personal effort into the project, having almost lived in Israel the past 2 years. CHIC has sunk a reported $20m which it would lose if the deal cannot be finalized.

Name change

The road started off being called the Cross-Israel Highway but since it doesn’t in fact go across Israel but rather goes lengthwise north-south, it is now more logically being called the Trans-Israel Highway. Also known as Highway 6, it will form a spinal north-south route that ties together existing and planned east-west routes. Most of the 86km-long road between Shoresh in the south past the eastern fringe of the Tel Aviv near the Lod airport up to Rosh Ha’ayin will be 2x2-lanes to start with, and it will have 13 interchanges (2 of which are already under construction by CIHL), 88 bridges and a pair of 250m tunnels through a hilly section.

The Hughes/Raytheon automatic tolling system will be deployed so no toll plazas are needed. As on 407ETR in Toronto all tolling will be done at highway speed in open road conditions using active ASTMv6 transponders or Hughes Aircraft designed license plate imaging. Unlike 407ETR which tolls on a trip basis with equipment positioned at ramps to register entries and exits, the Trans-Israel will apply progressive point tolls with equipment mounted over the mainline between each interchange.

The concessionaire is responsible for design, financing, construction and operations for 30 years. Bank Hapoalim and Newcourt of Toronto are the Derech Eretz money-raisers. If Derech Eretz is unable to close by the new deadline of Jan 23, then CIHL says, it will negotiate with ITV. In that case the road would be French-designed and financed, and the toll system would be a revamp of the Saab Combitech system being installed on the City Link in Melbourne Australia. (Contact: CIHL cih@netvision.net.il)