The bid by China North Railway (CNR) in the huge Israel Railways locomotives tender has been disqualified, sources inform "Globes." The reason is the company's merger with Chinese company China South Railway (CSR), which is also competing in the tender. In recent months, the legal department of Israel Railways, which has been considering the participation of the two Chinese railway manufacturers, sent a letter to the offices of the merged company, China Railway Rolling Stock Corporation (CRRC), in China asking it to choose which bid should be withdrawn. French company Alstom and Canadian company Bombardier say that if a Chinese company wins the tender, they will seek court intervention.
Israel Railways is currently in midst of an estimated NIS 13.7 billion railway electrification program. As part of this project, the company last July published a tender for the purchase of 62 electric locomotives, with an option for 16 more. The average cost of a locomotive is estimated at €3.5 million. The tender is one of the biggest in the electrification project.
Four companies submitted bids in the tender: CNR, CSR, Alstom, and Bombardier. The two Chinese companies merged in recent months, however, leading Israel Railways to investigate possible price collusion between them. According to Israel Railways, CNR and CSR bid through their subsidiaries, and the parent companies' merger therefore creates a situation in which the two subsidiaries have become fellow subsidiaries. The solution to this problem devised by Israel Railways was to tell CRRC to withdraw one of the two bids.
The two non-Chinese bidders in the tender are not satisfied with the disqualification of one bid, and are demanding that both bids be disqualified. They say that the Mandatory Tenders Law bars participation in a tender by legal entities that did not participate in it from the beginning. The companies are also criticizing the option given to CRRC to choose which bid to continue, five months after the bids were submitted. Alstom and Bombardier say that they are not planning to seek legal intervention at this stage, but will not hesitate to do so if the CSR bid wins.
The Israel Railways statement said that the company would not comment on matters being discussed by the tenders committee.
Published by Globes [online], Israel business news - www.globes-online.com - on July 15, 2015
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