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The Budget Division: Following the opening of tenders for import, the price of the bus dropped by 50% ¦ Nissenkorn is expected to take advantage of the meeting to discuss the electricity reform, which is stuck in the section concerning the taxation of pensions for employees
The dispute between the government ministries regarding the bus tenders is due to be discussed in principle at the meeting scheduled for tomorrow between Finance Minister Moshe Kahlon, Economy Minister Eli Cohen, Histadrut Chairman Avi Nissenkorn and Manufacturers Association President Shraga Brosh. The heads of the divisions in the Finance Ministry, including Shaul Meridor and Roni Hizkiyahu, will also take part in the meeting, and will also use the meeting to discuss Kahalons issue of pension taxation for IEC employees, which is delaying implementation of the reform in the electricity sector.
Reciprocal procurement in government tenders is accepted in most countries of the world, in which a company that wins the tender is obligated to make purchases or investments in the economy that published the tender it won, at a rate of 35% of the tender price in a civil tender and 50% in a security tender. However, some countries have signed agreements that reduce their reciprocal procurement obligations.
The bus sector, based mainly on the two large companies, Haargaz and Caravim, has about 800 employees. They claim that the Ministry of Finance and Transports policy is endangering their workplaces, because as part of the reciprocal procurement process, the two companies received assembly work for the imported buses. However, the Ministry of Finance and Transportation claim that reciprocal procurement applies to products rather than to services, and therefore public transportation service tenders are not obligated to reciprocal procurement. Even though these tenders also include the import and purchase of new buses.
Recently, the Ministries of Finance and Transport convened the tenders committee for service lines to discuss the matter, which decided that it would not require public transportation tenders and the duty to favor Israeli products. According to the decision, even in existing tenders, Dan and Egged will not be required to realize the debts. It was further agreed that historical operators should be informed that the provisions of the agreement between them and the State relating to industrial cooperation or preference for Israeli products are null and void.
In a preliminary discussion held at the Finance Ministry ahead of the meeting tomorrow, budget department officials presented data according to which the prices of buses in tenders dropped by about 50% since they were opened for competition from abroad, from NIS 1.4 million to NIS 700,000, including buses manufactured in Israel.
For several years now the demands of industrialists to apply reciprocal procurement obligations on services and BOT auctions are rejected. This time, they also include Nissenkorn, who is known to be close to Kahlon, in the hope that he will serve as an equalizer.
The Ministry of Economy supports the Manufacturers position, and maintains that reciprocal procurement should be applied to bus tenders in particular and to tenders for services in general, including BOT tenders. In BOT tenders, large works are given to sub-contractors, and the laws of the obligation to tender or preference for Israeli products that apply to the government do not apply to them. These are huge tenders of billions of shekels, such as the tender for the city of the IDF training centers in the south and the tender for the light rail.
Prior to the discussion, Minister of Transport Yisrael Katz announced today that he had ordered the 15% advantage of Israels production in connection with the purchase of buses for Egged and Dan companies, as long as they were supported by the State. He decided to do so after a meeting with representatives of the companies factories that make up the buses in Israel, and after consultation with the Minister of Finance and the relevant professional bodies.
"As someone who led the big reform and the competition for the supply of buses in Israel, which saved about NIS 600,000 per bus, and made it possible to significantly increase the amount of inputs invested in public transportation at the expense of the surplus profits of factory owners, Preference for Israeli products to protect Israeli factories and allow them to compete fairly against the importation of foreign buses, "said Minister Katz.
On the other hand, it appears that Katz does not waive his position that there is no reciprocal procurement obligation in tenders for operating bus lines. Katz also appealed to Finance Minister Moshe Kahlon to re-examine the governments policy on reciprocal buying in all matters relating to the purchase of buses, with all the economic and legal aspects that accompany it.
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