Even after three days of negotiations, representatives of the government and the Tel Aviv light railway franchisee Metro Transport Solutions (MTS) have been unable to bridge their differences for financing the project. The gap between the parties is reportedly about NIS 800 million for the railway's construction, and the government representatives warned MTS that its financing costs were too high.
The government and MTS are seeking to resolve the disputes that have delayed the financial closing for the railway, which is now two years behind schedule. The parties have agreed that each side will thoroughly review the material over 10 days and that they'll meet again in 14 days.
A government source close to the talks said, "There's a limit to how much the government is willing to go toward the franchisee. We've reach a deal on the safety net, but the interest rate that MTS is currently demanding is too high. In view of the improving financial situation in the markets, there's no reason for the government to bear such an interest rate."
An MTS source close to the talks said, "There has been progress in the negotiations, but the Ministry of Finance must grasp that there was a severe financial crisis. Governments are now providing 100% safety nets for infrastructure projects. It will be very hard to obtain financing for the project at the terms that the government is demanding."
MTS is a consortium comprising Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY), Egged Israel Transport Cooperative Society Ltd., Siemens AG (NYSE: SI; XETRA: SIE), China Civil Engineering Construction Corporation (CCECC), and Sociedade de Construcoes Soares da Costa SA of Portugal.
Published by Globes [online], Israel business news - www.globes-online.com - on July 19, 2009
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