Published On: Mon, May 12th, 2014

Chinese cos bid lowest for building new ports in Israel

The bids by the Chinese state-owned companies are below Israel Port Company’s estimates.

ports

Chinese state companies have made the lowest financial bids for constructing the new ports in Haifa and Ashdod, according to sources close to the tender process.

Sources inform “Globes” that the companies, which belong to the Chinese Ministry of Transport, offered to build the South Port in Ashdod for NIS 3.3-3.4 billion (about $942 million), and the Bay Port in Haifa for NIS 3.1-3.2 billion (about $885 million). The official estimate of the Israel Ports Company is NIS 4 billion (about $1.14 billion) for each port, so that, on the face of it, the Chinese bid represents a saving of some NIS 1.5 billion (about $428 million).

Israel Ports Company was surprised by the aggressive price bids from the Chinese. A source connected to the tender said that the price proved the correctness of Minister of Transport Yisrael Katz’s decision to construct the ports simultaneously, despite the Ministry of Finance’s reservations because of the high cost and doubts about the necessity for two ports.

Three consortia are participating in the tender for constructing the ports: PMEC, which represents the interests of the Chinese Ministry of Transport in Israel; a consortium comprising Shafir Civil and Marine Engineering Ltd. and Ashtrom Properties Ltd.(TASE:ASPR); and a third consortium comprising Solel Boneh of the Shikun & Binui Holdings Ltd. (TASE:SKBN) group and Ludreco, of the Belgian Jan De Nul group.

The financial bids for the construction of the ports were submitted last Thursday, after the technical bids were submitted in February. The weighting for the financial component of the bid is 80% and for the technical component 20%. The threshold for the technical bids is 70 points out of a possible 100, so that the lowest financial bid will not necessarily win the tender if the gap between it and the next lowest bid is not great.

If one winner is slected for both ports, it will have the option of choosing to build just one of the two, and Israel Ports Company will offer the under bidder the opportunity to build the second port at a price similar to that bid by the winner. If the under bidder refuses, then the same offer will be made to the third bidder.

Published by Globes [online], Israel business news – www.globes-online.com 

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