Ministry of Finance sources told "Globes" that the committee overseeing the Tel Aviv light rail project will decide at its meeting this week to cancel the concession granted to the MTS consortium, and instead switch it to a government-budgeted project.

Yesterday, the Prime Minister's office said that the discussion with the Prime Minster, which is scheduled for Thursday, after the ministerial committee meeting, will be postponed for a month. The report was understood to mean that the committee was given free rein to decide on cancelling the project.

Most members of the committee believe that the concession should be cancelled and that the project itself should be carried out with government funding. A minority of committee members believe that there is room to reconsider contact with the Metro Rail group, which lost the bidding to MTS in 2006.

The committee's pending decision is based on the feeling that MTS is not able to reach financial closing on the deal within a reasonable time frame, because, among other reasons, of difficulty in finding a financial institution that will agree to recycle its short term debt.

MTS sources responded, "Most of the delays in the project were due to personnel changes at the Ministry of Finance, and a lack of administrative consistency among the various government elements."

Published by Globes [online], Israel business news - www.globes-online.com - on May 10, 2010

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