Posted on January 16, 2023
Israel completed the sale of the Haifa Port Company to a partnership led by India’s Adani Ports along with an Israeli chemical and logistics company Gadot Group. The Israeli government had started the process to sell its interest in the port company five years ago and after the development of a Chinese-owned terminal in Haifa launched the sale process as a means to expand the port and balance against the Chinese interests.
The privatization of the Haifa Port Company was one of the largest infrastructural and financial projects of the last decade managed by the State of Israel. They reported that it attracted broad international interest after the bidding process was announced in January 2020. A total of 18 companies partnered to form five bidding groups. DP World had expressed interest early in the process, but in the last round, according to media reports, it came down to the Adani partnership, a group being led by Israel Shipyards, and another from the British Lomar Shipping.
The Ministry of Finance announced the winning bid valued at $1.15 billion in July 2022. In recent months, the group, in cooperation with the state authorities, received the approvals required to complete the transaction. This included approval of the competition commissioner for the selling of the state’s shares in the Haifa Port Company, which becomes a subsidiary of Adani. The Indian company owns 70 percent of the company while its Israeli partner holds the remaining 30 percent.
Commenting on the completion of the privatization process, Minister of Finance, Bezalel Smotrich, said “We never dreamed that the deal would be carried out on these scales. It is good for the port. It will be able to be competitive and competition is important for the economy. Along with the construction of the new ports,” said Smotrich he hopes Israel will be able to do the same in Ashdod port which the government also plans to privatize.
The privatization of the Haifa Port Company is part of an overall reform of Israel’s seaports that began in 2003. The aim is to increase competition in the seaports, and the privatizations are expected to improve the efficiency of the ports through significant investments in the port. The government stipulated in the tender process that the investors should spend at least $288 million on the modernization and expansion of the Haifa Port Company’s operations.
In addition to privatizing the existing port operations in Israel, the government in 2018 awarded a contract to China’s Shanghai International Port Group (SIPG) for the development of a new terminal in Haifa. It became a controversial deal but it resulted in the construction of Israel’s first new terminal in years. The facility opened in September 2021 with an initial capacity of 1 million TEU annually. Plans call for the terminal to add another 800,000 TEU of capacity in a second phase.
The Port of Haifa and its container terminal continue to handle 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.