Carmelton is finally going ahead with plans for a US$221M project to build twin road tunnels under Mount Carmel in Haifa, the port city in northern Israel, nine years after tenders were first invited.

The deal between Carmelton, a joint venture between Ashtrom and Housing and Construction Holding (Shikun Ubinui), and Israel’s finance and transport ministers was signed on 1 August. The agreement paves the way for work to start on the 6km highway by April 2006 with the road due to open in 2010.

Plans call for the construction of two pairs of tunnels, each of about 8m diameter and containing a dual two-lane carriageway. The 3.1km long Western tunnels will run from the Carmel Beach area to the Carmel Mountains, while the 1.5km long Eastern tunnels will connect the Carmel Mountain with Krayot Junction. The scope of work also includes some other carriageway works.

Under the terms of its 35-year franchise, Carmelton will finance the cost of the tunnels, pay the Israeli government a further US$59M in royalties and introduce a revenue-sharing mechanism that would see the government receiving up to 70% of any additional profit above stipulated levels.

The scheme was initially set to start in 1997 when the Carmelton consortium won a build-operate-transfer concession after tenders were invited in 1996. The Carmelton team initially comprised Ashtrom, two listed Israeli companies, Property and Building and FIBI Holdings and Spanish contractor, Dragados.

Delays to the scheme were caused by a series of funding wrangles and legal problems until the concessionaire, the finance ministry and financiers agreed a new franchise agreement. Under this new pact, which is expected to allow financial closure of the agreement by October, Carmelton will receive guaranteed income if traffic levels fail to meet projections, while it has also agreed a 50% reduction in toll fees to those originally envisaged.