Ministry of Finance
PPP/PFI Projects
in Israel
Mr. Hagai Miller
Senior Deputy Accountant General
Ministry of Finance
The Division of PPP Projects
Policy
Increasing
investments in infrastructure will help
sustain Israel’s economy growth
Increasing
private sector involvement in
government supplied services, mainly in the
infrastructure sector
Enhancing
efficiency and increasing resources
available for financing infrastructure projects
Optimizing
Risk allocation between Public and
private sectors
Ministry of Finance
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Ministryof
ofPPP
Finance
The Division
Projects
The government’s decision is to
focus on six fundamental sectors:






Railroads
Transportation
Water desalination and sewage treatment
Electricity manufacturing & Gas delivery
Construction
E-Gov
Ministry of Finance
33
Ministryof
ofPPP
Finance
The Division
Projects
Map of PPP/PFI
Projects in Israel
• Cross Israel Highway
• LRT’s
• Highway No 431
• Highway No 531
• Qrayot bypass road
• Desalination facilities
• IPP
• Prison
Ministry of Finance
44
Ministryof
ofPPP
Finance
The Division
Projects
Volume of Operations
in the PPP/PFI Segment
Distribution of planned investments by sectors
Transportation:
$ 5 billion
Water:
$ 0.6 billion
Accommodation:
$ 0.3 billion
Energy:
8%
5%
4%
$ 0.25 billion
Details & Status
83%
Total $ 6 billion
Ministry of Finance
55
Transportation
Energy
Water
Accommodation
Ministryof
ofPPP
Finance
The Division
Projects
Projects’ Status
(■ Early stage; ■ After Short List; ■ After Agreement)
Transportation:
Status:
• Cross Israel Highways
• Jerusalem Light Railway
• Carmel Tunnels
• operation
•
•
•
•
•
• RFP published
• Financial close
• Financial close
Highway no. 431
Tel-Aviv Mass Transit System
Qrayot Bypass- toll road
Highway no. 531- toll road
Tel-Aviv Fast Lane
•
•
•
•
RFP published, Responding questions
Model under consideration
Model under consideration
RFP to be published
Energy:
Status:
• IPP - Mishor Rotem
• IPP’s several locations
• PQ in process
Ministry of Finance
66
Ministryof
ofPPP
Finance
The Division
Projects
Projects’ Status
(■ Early stage; ■ After Short List; ■ After Agreement)
Water:
• Ashkelon desalination facility
• Palmachim desalination facility
• “Western Galili” desalination facility
• Hadera desalination facility
Status:
• Under construction
• Financial close
• Financial close
• RFP published
Penitentiary :
Status:
• Prison - Be’er Sheva
• RFP published, Responding
questions
Ministry of Finance
77
Ministryof
ofPPP
Finance
The Division
Projects
Project Feasibility Study
Phase 1 economic
feasibility study:
Cost/benefit
analysis
Phase 2 prior to onset
of tender
process and
during tender
process
Project is
economically
feasible
No
Project will not be
implemented
Yes
Business
environment is
suitable
for PPP/PFI
No
Public sector
implementation
using alternative
method
Yes
Project meets
PPP/PFI criteria
No
Yes
Phase 3 decision &
implementation
Analyzing the
Yes
bids compared ‫החלטת ממשלה‬
to the PSC
Ministry of Finance
88
Signing the
concession agreement
&
following its execution
Ministryof
ofPPP
Finance
The Division
Projects
Authorities involved
throughout the process
Managing the
Concession Agreement
The Tender
Implementing
Authority
Steering
Committee
Inter-Ministerial
Tender Committee
Designated
Company
WDA, JPTA,
CTA
Cross Israel
Highway,
Tel Aviv Mass
Transit
Ministry of Finance
Relevant Government Ministries
Inbal – The Division of PPP
External Consultants
Ministry of Finance
99
Ministryof
ofPPP
Finance
The Division
Projects
The Tender Process
 Decision to execute project in PPP/PFI method
 Appointing a Tender Committee by the Accountant General
 Establishing Work Teams
 Studying the material \ Structuring the risk matrix
 Preparation of tender documents
 Tender publication - widespread distribution
 The tender process is “transparent”
 Foreign entities are invited to participate in the tenders.
Ministry of Finance
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Ministryof
ofPPP
Finance
The Division
Projects
The Division of Public-Private
Partnership Projects
The Division is in charge of managing, coordinating,
planning and executing the tender processes, and the
concession agreements.
The division’s main tasks are:

Creating a professional body in the PPP/PFI field in Israel

Making the tender process as efficient and speedy as possible

Being a leading force in the implementation of the Concession
Agreement during the concession term

Setting the Standards in the PPP/PFI field in conjunction with
governmental authorities and the private sector
Ministry of Finance
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12
Ministryof
ofPPP
Finance
The Division
Projects
Risk Allocation
Risk
Public
Private
Shared
Land acquisition
Detailed design
Cost overruns
Completion delay
Archaeological findings
Maintenance costs
Force Majeure
Interest. Rate
Legislation changes
Political risks
Collection risks
Demand risks
Ministry of Finance
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13
Ministryof
ofPPP
Finance
The Division
Projects
Ministry of Finance
Water
Desalination
PPP/PFI Projects
Ministry of Finance
The Division of PPP Projects
Water in Israel: Key Facts
Year
Increasing demand*
2005
2010
2015
2020
2,060
2,505
2,558
2,805
1,470
Limited natural sources
* All figures in million m3/year
• Israel’s utilization of its natural water sources is complete
• Main natural source (Coastal Aquifer) is under risk of contamination
• Almost full brackish water utilization and wastewater reuse
Seawater Desalination:
One of the solutions for meeting future demand
Ministry of Finance
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Ministryof
ofPPP
Finance
The Division
Projects
PPP/PFI – A Strategic Instrument
• Desalination technology (RO) has been improved
significantly within the recent decade
• Israeli private sector plays a key role within the global
industry of desalination
• Large scale projects
• Lack of experience & capabilities within the public sector
PPP/PFI Method:
The right thing in the right time
Ministry of Finance
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Ministryof
ofPPP
Finance
The Division
Projects
Current Main Projects
Desalination
Facilities
Ashkelon
(South of Israel)
Hadera
(North center of Israel)
Palmachim
(South center of Israel)
“Western Galili”
(North of Israel)
Ministry of Finance
Million m3
p/a
$US
(m)
Method
Status
100
270
BOT
Construction
Finish
12/2005
100
220
BOT
Tender
BOO
Financial
Closing
1/2005
BOO
Financial
Closing
6/2005
(est.)
30
80
30
75
18
18
(est.)
Ministryof
ofPPP
Finance
The Division
Projects
Ashkelon Sea Water Desalination Facility

World’s largest facility based RO technology

IPP based natural gas

First Israeli project that raised finance from
institutional lenders
JV between

Ministry of Finance
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I.D.E – Israeli firm & a
leading global player

Veolia Water S.A.

Israelis investors
Ministryof
ofPPP
Finance
The Division
Projects
Roads
PPP/PFI Projects
Mr. Marc Hanhart
Projects Management Director
Ministry of Finance
The Division of PPP Projects
Transportation / Roads
Ministry of Finance
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Ministryof
ofPPP
Finance
The Division
Projects
Highway No 431

Toll free suburban highway constituting the southern part of the Circular Highway
around the Tel Aviv metropolitan area, 20 km long with 3 basic lines in each direction,
inc. 12 interchanges

Concession period of 25 years, inc. 3 years construction phase
Private sector investment (cost of construction) assessment - $ 300 M



Public sector investment assessment: $ 120 M (Including land expropriation)
Payment scheme to the Private sector:






Bids to be submitted on February 3, 2005
4 Bidders qualified for tendering :
•
•
•
•

Fixed periodic payment (Subject matter for competition)
$ 90 M Construction Grant to be disbursed at completion of construction
Variable payment (Shadow toll) is to be paid as an incentive to maximize the demand
Bidders may request payment in Shekels, Dollars and/or Euro, according to cost/
financing structure.
Denya Cebus group
Shapir Civil & Marine Engineering group
Ashtrom,,Solel Boneh, Housing & Construction group
Arenson, Ramet, Roichman group
Foreign companies invited to be either member of bidding groups or subcontractor.
Ministry of Finance
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Ministryof
ofPPP
Finance
The Division
Projects
Fast Line project

Construction of a one way lane from Lod interchange (near Ben Gurion
Airport) to Kibbutz Galuyot interchange (Tel Aviv entrance ) on
Highway no 1 ( Jerusalem-Tel Aviv ) , construction of Park and Ride
facility for 2000 cars and operation of bus shuttle service (free of
charge for passengers) to the Business Center of Tel Aviv.

Fast line of about 9 km for Public Transportation Vehicles, and excess
capacity will be offered to private car drivers willing to pay a toll, which
amount will be constantly adjusted according to demand.

A Fast Lines Law was legislated and its purpose is to encourage the
use of public transportation instead of private cars. This project will
serve as a model for further similar expected projects.

Concession period of 30 years, incl. 3 years construction phase.

Private sector investment (cost of construction) assessment - $ 75 M.
Ministry of Finance
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Ministryof
ofPPP
Finance
The Division
Projects
Fast Line project (continued )

Payment scheme to the Private sector:






Fixed periodic payment (Subject matter for competition)
Construction Grant ( amount to be decided ) to be disbursed at completion of
construction
25% of toll income
fixed amount for each private car left at the Park and Ride facility during morning
peak hours.
Income from additional commercial activities to be approved by the State.
Bidders may request payment in Shekels, Dollars and/or Euro, according to cost
structure.

Tender documents expected to be published in February 2005.

4 Bidders qualified for tendering :
•
•
•
•

Africa Israel, Housing & Construction, Egged (Public Transportation), Aecon group
Shapir Civil & Marine Engineering, Nahor( Dan Transportation Company ) group
Tahal Consulting Engineers, Kavim (Public Transportation) group
Malrag Engineering, Terre-Armee, Connex group
Foreign Companies invited to be either member of bidding groups or
subcontractor.
Ministry of Finance
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Ministryof
ofPPP
Finance
The Division
Projects
Highway No 531

suburban highway constituting the nothern part of the
Circular Highway around the Tel Aviv metropolitan area, 13
km long, incl. 9 interchanges ( half of the way will be
executed in partnership with the private sector ).

Private sector investment (cost of construction) assessment $ 300 M.

Public sector investment assessment: $ 50 M (Including land
expropriation).

Toll payment concept is currently under review, based on
traffic forecast.

Construction of the highway to be coordinated with the
planned construction of a new railways track in the central
part of the highway.
Ministry of Finance
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Ministryof
ofPPP
Finance
The Division
Projects
Ministry of Finance
Transportation
Mass Transit System
PPP/PFI Projects
Mr. Yaron Kestenbaum
Projects Management Director
Ministry of Finance
The Division of PPP Projects
Railways Transportation
Solutions
The promotion of the Tel-Aviv LRT Red Line is an integral part
of the Israeli government policy to expand the sub-urban railways
services and to develop and promote urban railways transportation
solutions, both being complementary transportation crisis modes.
The Israeli government acknowledges that investments
in railways transportation infrastructures can provide an
appropriate solution to the transportation crisis in the country.
Lately the government of Israel has decided to invest a sum
of 20 billion NIS in Israeli railway.
This acknowledgment is reflected in increased long run budgetary
investments in railway solutions in the recent
and in the coming years.
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The Division
of Publicof
Private
Partnership projects
Ministry
Finance
Ministryof
ofPPP
Finance
The Division
Projects
Network of Planned Lines
Petah Tikva - Tel Aviv - Bat Yam
Holon To Red Line in Tel Aviv
Kfar saba, Raanana, Herzliya and Ramat Hasharon
to the Red Line in Ramat Gan
Bikat Ono to Tel Aviv
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The Division
of Publicof
Private
Partnership projects
Ministry
Finance
Ministryof
ofPPP
Finance
The Division
Projects
The Red Line
Serves 5 cities - Bat Yam, Jaffa, Tel Aviv, Bnei Brak, Ramat Gan and Petah Tiqva
Length of the line is 22 km, of which:
11 km are at grade
11 km are underground
10 U/G stations
21 at grade stops
Crosses 55 intersections at grade
Travel time from Petach Tikva to Tel Aviv (Arlosoroff) - 19 minutes
Travel time from Bat Yam to Tel Aviv (Arlosoroff) - 28 minutes
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The DivisionMinistry
of Public Private
Partnership projects 29
of Finance
Ministryof
ofPPP
Finance
The Division
Projects
B.O.T- Build Operate Transfer
The Concessionaire is required to:
Undertake Final Design & Construction
Supply Rolling Stock and Electro-Mechanical Systems
Implement & Manage Operations and maintenance
Finance the Project
Prove Experience in Specified Areas
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The Division
of Publicof
Private
Partnership projects
Ministry
Finance
Ministryof
ofPPP
Finance
The Division
Projects
The Concession Period
A 32 year commitment
Eligible for all derivative income
during this period
After concession period expiry,
ownership transfers to the state
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31
The Division
of Publicof
Private
Partnership projects
Ministry
Finance
Ministryof
ofPPP
Finance
The Division
Projects
Public Sector Commitments
Financial Contribution
The State undertakes to pay the Concessionaire
a State Grant in accordance with a structured
milestones progress payment mechanism
Sharing Ridership Revenue Risks
The state is willing to share with the Concessionaire
the risks related to variations between the actual
ridership revenues and the state’s ridership revenue
reference set out in the Concession Documents
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32
The Division
of Publicof
Private
Partnership projects
Ministry
Finance
Ministryof
ofPPP
Finance
The Division
Projects
Public Sector Commitments
Project’s Risks Allocation
The Contract Documents allocate the following risks:
Antiquities
Contamination
Ground Condition
Special Circumstances
Site delivery
Changes in the Statutory Plan
Government support :
Limited competition along the LRT line
Priority at traffic intersections
Traffic regulation
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33
The Division
of Publicof
Private
Partnership projects
Ministry
Finance
Ministryof
ofPPP
Finance
The Division
Projects
Red Line - Project Status
Engineering Design completed
Statutory Process - completion
Utility relocation and advance works - in progress
Bat Yam, Jaffa, Ramat Gan, Bnei Brak, Petach Tikva.
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The Division
of Publicof
Private
Partnership projects
Ministry
Finance
Ministryof
ofPPP
Finance
The Division
Projects