Government preparing new tender for Eilat Port

The Israeli government is preparing to publish a new tender for the operation of the Eilat Port. The Ministries of Finance and Transport are concluding that there is no reason to extend the concession granted to the Eilat Port Company, owned by the Nakash brothers, who acquired it in 2013, for a period that is set to end in about two years.

Sources in the automotive industry believe that business entities in the Gulf are will show interest in a future tender given the port’s strategic location.

The change following the war

In 2012, the government decided to privatize Eilat port, and a year later, operation was transferred to the Eilat Port Company, headed by the Nakash brothers, who bought the operating concession for 15 years with an option for an additional 10 years. The concession was purchased at an extremely low price of NIS 120 million, when taking into account the enormous dividends generated since then.

The state’s plan was for the port to also handle containers, but this was never implemented, with the port specializing in unloading cars – the most profitable field in the shipping industry.

Until the war began, 50% of cars imported to Israel were unloaded there. In addition, an EAPC pipeline for conveying crude oil as well as exports of fertilizers and minerals also pass through the port. According to data revealed in Knesset Economic Committee’s discussions, the port owners took a dividend of NIS 162 million in the four years preceding the war.

The war and the Houthi attacks on the Red Sea have led to an almost halt of ships calling at Eilat port, to the point that it has almost completely shut down. Thus, in 2023, the port’s revenue amounted to NIS 212 million while in 2024, with the trade route through the Red Sea closed, it stood at only NIS 42 million, a decrease of 80%.

Meanwhile, the port has been provided with assistance since the start of the war, as part of the business plan for the entire economy and assistance to businesses in cities dependent on tourism. It also received a deferral of payments from the state and a state guarantee for the loan. In addition, last June, the government voted on a specific outline for assistance to Eilat Port, so that the port was given up to NIS 15 million compensation, conditional on the payment of NIS 3 million in user fees, which the port has not yet paid to the state since the outbreak of the war.

A new tender for the port?

The Ministry of Finance and the Ministry of Transportation have been suspicious about Eilat Port’s request for compensation, in view of the record profits its owners have recorded since they purchased it. Also, according to government sources, the port did not make the expected investments. Meanwhile, the port also clashed with the Histadrut, which represents its employees, and they approached government ministries last April with a request not to grant the owners the option to extend the contract.

Debt ridden Eilat Port to close Sunday

The Histadrut then claimed that the conditions necessary for the port’s suitability had ceased to exist by failing to meet minimum manpower standards and neglecting the port’s infrastructure, and that some of the port’s cranes were unusable, while there are deficiencies in compliance with environmental standards and shipping regulations. The port sharply attacked the Histadrut in a letter of response and denied the claims.

This month, the port threatened to close its doors after its accounts were seized following the Eilat Municipality’s demand for payment of taxes totaling NIS 10 million. The threat was met with displeasure by the regulators.

In any case, by the end of the year, the Minister of Transport and the Minister of Finance are supposed to decide whether to extend the franchise and include the option period in it. The ministers have not yet officially decided and signed the documents, but “Globes” has learned that the Ministry of Transport is already working on preparing a new tender for operating the port in order to operate it under different ownership within two years from today.

“Potential for a land bridge”

Sources in the automotive industry believe it will be a long time before the maritime traffic of ships dedicated to transporting vehicles (RO-RO) in the Red Sea resumes, due to the ongoing Houthi threat, to which no military solution has been found. Currently, most vehicles arriving in Israel from East Asia make a long detour via the Cape of Good Hope in Africa and from there to European ports.

In addition, most international shipping companies for transporting vehicles avoid sailing directly to Israel, so most vehicles are transported European ports to the two ports in Haifa Bay and Ashdod.

This process extends the time it takes for new vehicles from East Asia to arrive in Israel by nearly two weeks and increases the cost of shipping by thousands of dollars per vehicle compared with the direct route to Eilat via the Red Sea. However, this process has created a thriving “business” for Israeli ports, especially Haifa Port and Haifa Bay Port, which in the past year have significantly increased the volume of unloading and storing vehicles.

Recently, several importers reported that they have heard estimates from Eilat Port about the resumption of shipping vehicles to Eilat via the Red Sea. However, such estimates have been heard in the past and have not materialized due to continuation of the war. Expectations for the return of vehicle transport ships to the Suez Canal also have not happened.

However, sources in the automotive industry estimate that international factors, including major business entities from the Gulf countries, are expected to show active interest in participating in the future tender for operating the port, due to its strategic location and the expected changes in the balance of power in the Middle East. According to sources, “the potential for a future land bridge, which would bypass the Suez Canal via land rail from Eilat to the Mediterranean ports, is still a strategic goal, which could significantly increase the importance of the southern port in the future.”

No response has been forthcoming from Eilat Port.

Published by Globes, Israel business news – en.globes.co.il – on July 27, 2025.

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