China Civil Engineering Construction Corporation (CCECC) has notified Carmelton Ltd. that it is prepared to continue work on the Carmel tunnels. It also undertook not to leave Israel until the project is completed, according to sources close to the company.
CCECC says that, while it is prepared in principle to resume excavating the tunnels, it is constrained from doing so because Carmelton has not yet paid for work done in July and August. CCECC also insists on receiving compensation for rising construction costs. This issue is due to be discussed separately.
Carmel is own in equal shares by Ashtrom Properties Ltd. (TASE:ASPR) and Housing and Construction Holding Co. Ltd. (Shikun u'Binui) (TASE: HUCN). The consortium brought in Y. Lehrer Engineering Ltd. to excavate part of the tunnels and initiated talks with other Israeli contractors, including Dan Rolidar Ltd., to replace CCECC.
CCECC stopped its work on the Carmel tunnels a month ago while it sought to reopen its contract with Carmelton. The company says it was losing money because of rising for raw materials and the weak dollar. Carmelton rejected the demand and negotiations between the parties have since been deadlocked.
Infrastructure industry sources estimate CCECC's demand at NIS 80 million. The original contract stipulates a cost of NIS 350-400 million. The Carmel tunnels are due to be completed by the end of 2010, and opened to traffic in April 2011.
Published by Globes [online], Israel business news - www.globes-online.com - on October 7, 2008
© Copyright of Globes Publisher Itonut (1983) Ltd. 2008