The Israeli government announced on Thursday that it has selected the winning bid for the privatization of the Haifa Port Company, which operated one of the largest container and cargo terminals in the country. The nearly two-year process had drawn interest from many of the leading port companies and is being promoted both as an attempt to lower costs and wait times while also countering a Chinese developed terminal at Haifa.
India’s Adani Group in partnership with an Israeli chemical and logistics company, Gadot Group, was declared the winner of the concession which runs to 2054. The group, which will be 70 percent controlled by Adani, bid 4.1 billion shekels ($1.18 billion) coming in 1 billion shekels above the government’s high-end estimate of 3 billion shekels ($865 million) for the contract. In addition, the government stipulated in the tender process that the investors should spend at least 1 billion shekels (approximately $288 million) on the modernization and expansion of the Haifa Port Company’s operations.
"This is good news for Israel's citizens,” said Avigdor Liberman, Minister of Finance. “Privatization of Haifa port will strengthen competition between the ports and bring down the cost of living. We will continue to lead a responsible policy of a free economy, which will boost the Israeli economy."
The Israeli government announced plans to privatize the existing port operations in Haifa in January 2020, two years after awarding another contract to China’s Shanghai International Port Group (SIPG). The controversial deal with the Chinese saw the construction of Israel’s first new terminal in years, which officially opened in September 2021. In the first phase of SIPG’s project, they created capacity for 1 million TEU annually with plans for an additional 800,000 TEU of capacity in a second phase.
The tender process for Haifa Port attracted interest from many leading operators of ports. Early in the process, DP World was reported to be interested as one of the first steps in the building of economic relations between Israel and the UAE after the Arab nation recognized Israel. The Israeli media outlet Globes reports that the bidding came down to three groups in the final round after a fourth withdrew due to the increasing price. Israel Shipyards was leading one of the groups bidding while the British Lomar Shipping was reported to be participating in another group.
The port of Haifa is Israel’s second largest port handling nearly half of all of Israel’s containerized cargo. In 2021, Haifa Port Company reported handling nearly 1.5 million TEU and more than 2.5 million tons of bulk cargo. Haifa Port also operates one of the largest passenger and cruise terminals in the country.
Privatization of the operation is part of the government’s ongoing strategy to increase competition in the ports. Eilat Port was privatized in 2013. Currently, another new port operation at Ashdod is being developed by Swiss-based Terminal Investment Limited, a subsidiary of MSC Group, and is expected to open before the end of the year.
Winning the concession at Haifa is also a major step for India’s Adani Group, which currently operates 11 domestic ports in six Indian states. Last year, the company announced plans to expand internationally. Management emphasized the strategic importance of the win in Israel as the company’s entry into Europe in what the company called “the lucrative Mediterranean region.”