Israel Railways Prioritizes Local Firms in New Electrification Tender After Disputes with Spanish Contractor
Israel Railways has launched a major 15-year tender for the construction and implementation of future railway electrification infrastructure, valued at several billion shekels. This decision follows prolonged conflicts with the Spanish company SEMI, which managed the electrification infrastructure over the past decade. To mitigate risks and improve project stability, the tender favors Israeli companies, divides the work among multiple contractors, and includes performance review checkpoints allowing contract adjustments or replacements.
The tender covers electrification of all future rail lines through 2050, including key projects such as the "Connecting Israel" vision with lines to Kiryat Shmona and Eilat, the fast corridors to Beersheba and Haifa, the fourth Ayalon track, the upgraded Emek line, and the Menashe line. The contract requires at least 50% Israeli representation among contractors, reflecting the need for local expertise and control, as Israel previously lacked sufficient knowledge when SEMI was awarded the work.
The move comes after a critical June 2025 report by oversight firm Focal, appointed by the Finance Ministry, which highlighted severe delays and poor management in the SEMI project, pushing the completion date from 2024 to 2027. Following these issues, Israel Railways terminated SEMI's remaining contracts in March 2024, prompting SEMI to file a legal injunction that was rejected by the Tel Aviv District Court. Subsequently, Israeli firms took over the remaining electrification work.
Financial disputes also persist, with SEMI demanding approximately 480 million shekels more, including a 30 million euro payment agreed in April 2024 for delays and potential early completion bonuses. Israel Railways claims repeated contract breaches by SEMI justified canceling parts of this agreement and reallocating work to local companies. Currently, 75% of the rail network is electrified, with about 800 kilometers adapted for electric trains, aiming to replace diesel propulsion with electric systems along 420 kilometers of track.
The first project under the new tender is expected to be the National Infrastructure Plan 65 for high-speed lines, estimated at 17 billion shekels, designed to enable train speeds up to 250 km/h and significantly reduce travel times while expanding network capacity. This plan remains in various stages of planning and approval by state authorities.
