The Marker, 10.02.2020
The Israel Lands Authority (RMI) is expected to approve on Wednesday the multiplication of royalties levied on the gravel. The current price is NIS 5 per tonne, and is expected to rise to NIS 8 in July and next year to NIS 11. By the Authority in the Franchisees and not the quarries delivered according to the updated method, by way of a tender for the level of royalties, an internal team established by the Authority has determined that the fair economic value of the gravel royalty is significantly higher than the set royalty price.
In the explanatory notes attached to the resolution, the Authority estimates that the expected revenue increase for the state will be NIS 50 million and that the impact on housing prices will be zero.Assuming that about 50,000 apartments are built in Israel each year and the gravel is also used for commercial construction and infrastructure, this is an additional cost of several hundred shekels per apartment. According to the Association of Land Builders, this is a more significant cost that will cost the apartments by NIS 2,000-1,000. This argument goes back to previous contractors' claims of an increase in the prices of quarrying materials , which resulted from a change in the PMI tender method.
"If RMI does raise the cost of gravel prices, then this is a scandal stemming from the failure to market quarry areas in Israel," said Tzvika David, vice president of the Builders' Association and chairman of the Infrastructure Contractors Division, "only a few weeks ago we were alerted to the marketing method. Of the quarry area by the manager, who markets the land at a high price, after the last tender was paid a record price of NIS 250 million for the operation of quarry in Israel, this marketing method will inevitably increase the cost of the quarry materials, which will directly affect the costs of projects mainly in the field of infrastructure .
"The gravel is a major component of road construction projects, and so doubling its price could result in a significant increase in the total cost of road construction. Building an average apartment in Israel requires 230 tons of quarrying material, with gravel being a major component. NIS in the price of the apartment. "
Apart from the price that the public will pay for the rise in input prices, which is a direct result of RPM's conduct, there is a significant increase in the price of existing projects. Contractors have faced infrastructure tenders and submitted bids based on the gravel price today, and doubling the price could cause significant damage and losses. They compensate for the price increases.
The state-level gravel royalties were last updated 14 years ago and were then set at NIS 2.5 per ton. Since then, prices have only been updated at the index rate.Over the years, the state has several times considered the possibility of raising the royalties, but the decision was rejected. In October 2014, a committee chaired by Prof. Eitan Shinsky stated that the quarrying materials were overpriced.The committee recommended that the state work to prevent over-profits - lowering the gravel prices in a way that would allow the quarry owners a reasonable profit.
As a result, the auctioning method was changed and the amount of the royalties was determined in the tender where the person offering the highest royalty wins.However, in the quarries delivered without a tender, high profitability remained. Instead of working to lower consumer prices, the state decided to increase its share of the profits of the quarry owners, which were delivered without a tender.