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Israel Halts Light-Rail Franchise Over Gaps in Financial Terms

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Israeli officials have terminated a franchise agreement awarded in 2006 to an international engineering-construction consortium to build a $2-billion, 23-kilometer light-rail network in metropolitan Tel Aviv because the owner and its contractors cannot agree on financial terms. The gap between the government’s cost figure and that of the building team’s, comprising firms from Israel, China and Portugal, is said to be around $100 million. Israel also is set to seize $35 million in financial guarantees the consortium had provided. The team already has spent $65 million on the project, and the state has spent close to $250 million on related infrastructure. Israel has said it is considering nationalizing the project and financing it out of the state budget, but the consortium says it will sue if that happens. The project was originally set for completion by 2012.

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