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Israel to Privatize Port of Haifa

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By The Maritime Executive 01-23-2020 09:44:00

After two years of deliberations, the government of Israel has approved a plan to privatize the Port of Haifa in a bid to attract new investment and increase competition. Haifa, located near Israel's northern border, is the nation's largest and busiest seaport. 

The sale will be completed by 2022, and the lease will last through 2054. The winning bidder must agree to make a minimum investment of $290 million, including at least $115 million for infrastructure investments. Workers at the port will receive a privatization bonus, and a portion of the remaining funding will be used for layoff compensation for about 200 positions. 

"This is an historic moment that comes after two years of intensive work and a long-term strategic process, the purpose of which is to enable Haifa Port to flourish in a competitive environment," said Eshel Armony, chairman of Haifa Port. "We must work to implement the privatization and identify buyers who will drive Haifa Port forward in the coming decades."

The auction for control of Haifa Port is widely expected to attract Chinese interest, as it would have synergies with a nearby Chinese-run container terminal. Last year, Israel awarded Shanghai International Port Group (SIPG) a 25-year concession to operate Haifa's new Bay Terminal, and it will take over operations in 2021. The award for SIPG drew considerable scrutiny from American defense officials, who raised concerns that it would provide a staging ground for Chinese intelligence operations near to Haifa's naval base. 

In 2019, ex-chief of naval operations Adm. Gary Roughead (USN, ret'd) warned of the counterintelligence risks at Haifa after SIPG takes over. “The Chinese port operators will be able to monitor closely U.S. ship movements, be aware of maintenance activity and could have access to equipment moving to and from repair sites and interact freely with our crews over protracted periods," Adm. Roughead reportedly said at a conference at the University of Haifa. “Significantly, the information systems and new infrastructure integral to the ports and the likelihood of information and electronic surveillance systems jeopardize U.S. information and cybersecurity."