Since the early days of the British Mandate, and until only a few years ago, the task of planning and constructing Israel's transportation network was undertaken almost exclusively by government entities.

In a move to align with the global wave of privatization, the Israeli Government passed a resolution in 1992 for the construction, by way of a public-private partnership, of a toll road that would cross Israel from north to south (Highway 6).

In the following two years Cross Israel Highway Law, 5755-1994 and Toll Road Law (Cross Israel Highway), 5755-1995 were passed, laying the legal foundation for the construction of Highway 6, whereby the Government would manage the tender phases and implement its policies through a state-owned company and a private company would execute the construction, operation and maintenance of the highway and collect toll fees.

The legislative move was a breakthrough in the field of BOT projects in Israel. In the two decades since the enactment, the principles of PPP and PFI funding in transportation infrastructure, renewable energy, desalination and construction of facilities and public institutions were successfully integrated into the Israeli market, enabling local and international developers, contractors and consultants to participate in the establishment of Israeli infrastructure.

In August 2016, the Israeli Government took significant steps to promote and develop the transport infrastructure around the Tel Aviv Metropolitan Area, by approving the allocation of hundreds of millions of U.S. dollars to a number of large-scale transportation infrastructure projects.

Following the success of BOT projects and the experience gained in the use of PPP and PFI principles in funding large-scale infrastructure projects, the Israeli Government is ready to roll out the red carpet for the international community of developers, contractors and consultants, to participate in some of the largest construction projects undertaken to date in Israel.

Congestion in the Tel Aviv Metropolitan Area

The Tel Aviv Metropolitan Area (Gush Dan) is Israel's largest metropolitan area, located along the Mediterranean coastline in the west, stretching from Netanya in the north to Ashdod in the south and bordering the 1949 armistice line in the east.

Home to more than 3.7 million people, Gush Dan accounts for approximately 45% of Israel's population. Many local and international companies are headquartered in the Tel Aviv Metropolitan Area, making it the country's primary financial hub.

The residents of Gush Dan produce over 6 million motorized trips each day, relying heavily on private vehicles as their main means of transport. Public transportation is mostly served by buses, with some suburban rail lines and accounts for less than 20% of all trips. Within approximately 30 years close to 6 million people are predicted to live in the Gush Dan area, producing over 10 million motorized trips daily. High population growth and private motor vehicle usage and low investment in public transport infrastructure have resulted in growing traffic congestion, which the Israeli Government seeks to address by investing hundreds of millions of U.S. dollars in building transportation infrastructure.

All Roads Lead to Tel Aviv

Road 431 and the Fast Lane on Highway 1

Highway 6, along with its extensions, is considered a major success in terms of reducing travel time between the northern and southern parts of the country. However, it does not solve the traffic congestion problem in and around the Tel Aviv Metropolitan Area.

In order to start to address the issue the Government initiated two projects:

  1. Route 431 is a highway that was built to serve the southern suburban areas of the Tel Aviv Metropolitan Area, at an estimated cost of US$650 million.
  2. The Fast Lane is a toll-lane that was built to alleviate some of the traffic congestion on Highway 1 between Ben Gurion International Airport and Tel Aviv, at an estimated cost of US$200 million.

Express Train between Jerusalem and Tel Aviv

The rail service between Jaffa (today a neighborhood of Tel Aviv) and Jerusalem began operating in 1892, during the Ottoman rule. The journey along this line was long and unsafe and it was eventually shut down in 1998.

In 2001 the Israeli Government decided to renovate the old rail line, to be used mainly for freight trains and also to lay a new rail line (A1 Line) for an express train (reaching speeds up to 160 km per hour) that will travel from Jerusalem, through Ben Gurion International Airport, to Tel Aviv, in 28 minutes.

The construction of the A1 Line is divided into several sections, each of which is currently under construction by different local and international contractors. Among the participating international contractors are Mosmetrostroy (Russia), Impresa Pizzarotti (Italy) and Max Bögl (Germany). The construction costs are estimated at US$2 billion and the line is expected to open in 2018.

NTA and the Red Line LRT Project

On 14 August 2012, the Israeli Government publicized the National Master Plan for Mass Transit System in the Tel Aviv Metropolitan Area (Plan 23/A/4). The Plan outlines an updated network of railway and bus routes, integrating existing and planned public transport systems. The Government approved the Plan in 2013 and immediately tasked a state-owned company, NTA – Metropolitan Mass Transit System Ltd, with the design and construction of the Red Line LRT Project. The tunneling works for the Red Line commenced on 2 August 2015.

The Red Line LRT Project is a light rail transit line, part at-grade (at the same level) and part underground, between the eastern and southern inner rings of the Gush Dan area. The line is currently under construction by Israeli construction companies, working in partnership with international contractors such as China Civil Engineering Construction Corporation and China Railway Group Limited and with international consultants such as WSP | Parsons Brinckerhoff. The opening of the Red Line is scheduled for 2021 and is estimated to cost US$3.5 billion.

Additional LTR and BRT Lines

The Plan envisages four additional light rail transit lines and at least two bus rapid transit lines to be built in the Tel Aviv Metropolitan Area.

On 2 August 2016 the Minister of Transport announced that construction of two of the light rail transit lines will commence in 2018. The Green Line will run from south to north and the Purple Line will run from east to west; both will join the already under construction Red Line. Early estimates put the combined construction costs of the Green and Purple Lines at around US$7.5 billion.

The other two planned light rail transit lines are the Yellow Line, connecting the northern and eastern inner rings, and the Brown Line, connecting the southern inner and median rings of the Tel Aviv Metropolitan Area.

In addition, two bus rapid transit lines (BRTs) are planned for the median ring of the Tel Aviv Metropolitan Area.

Tel Aviv Metro Project

On 12 August 2016, the Israeli Government approved its Economic Plan for 2017 and 2018, which includes plans to construct an underground railway system in the Tel Aviv Metropolitan Area. This so-called "Metro Project" is expected to be the largest and most expensive project undertaken in Israel, with an estimated cost of more than US$25 billion.

Tel Aviv Fast Lanes

On 16 August 2016, the Accountant General of Israel published the pre-qualification tender documents for the planning, financing, construction, operation and maintenance of major Park & Ride areas, to accommodate some 11,000 vehicles; the operation and maintenance of approximately 100 kilometers of toll-lanes alongside the Ayalon Highway and Highway 5; the operation of shuttle systems between the planned Park & Ride areas and the main areas of the Tel Aviv Metropolitan Area; and the construction of the new Highway 541.

The last date for submitting pre-qualification forms is scheduled for 1 January 2017, which presents an immediate opportunity for developers, contractors and consultants to become involved in this massive project to develop infrastructure in the booming business and social hub of Israel.

Have we mentioned already that all roads lead to Tel Aviv?

Originally published by Doing Business in Israel.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.