Board members want assurances on rail project

The firm creating Oahu’s driverless train system might finally have landed a buyer, and that has rail board members seeking assurances that any upcoming sale won’t disrupt or delay the $5.26 billion project — which already faces other challenges to finish on time.

Ansaldo Honolulu JV, the joint venture with a $1.4 billion contract to design, build, operate and maintain the island’s elevated rail line, might be sold to either Japanese electronics giant Hitachi or Chinese firm China CNR Corp. by the end of October or early November, news agency Reuters reports.

On Thursday, Honolulu Authority for Rapid Transportation board members peppered Ansaldo Honolulu JV project manager Enrico Fontana with questions about the potential sale and how that might affect the local project.

"What kind of disruption, if any, is there going to be in respect to production?" board Chairman Ivan Lui-Kwan asked. "It’s not clear to me … how this sale is going to take place. If it’s a sale of stock, then everything pretty much stays in place," but a sale of the venture’s assets could potentially change the local staff and structure that’s based in Oahu to help build the rail system, Lui-Kwan said.

Fontana said he wasn’t authorized to provide an official statement for Finmeccanica, the Italian defense-industry giant that owns the joint venture’s two companies, Ansaldo STS and Ansaldo Breda. However, he did offer that he was "pretty confident there will be almost no major impact" to production because whoever buys the venture will be "more than interested in delivering this project."

Finmeccanica has looked to sell Ansaldo STS, which makes train controls and operating systems and is profitable, and AnsaldoBreda, which makes the train cars and isn’t profitable, for more than three years. Ansaldo officials have repeatedly sought to assure that a sale would not hurt the Oahu rail project.

In February, amid prior speculation that a sale was imminent, HART Executive Director Dan Grabauskas requested that Finmeccanica CEO Alessandro Pansa explain the firm’s "plans with respect to Ansaldo Breda and Ansaldo STS, and to provide further assurances of both their performance and Finmeccanica’s continued support for our project."

"We remain concerned with (Ansaldo Honolulu’s) ability to deliver sufficient vehicles and a fully functioning controls system in time to support our planned opening of the first 10 miles of railway in 2017," Grabauskas added in that February letter.

Pansa replied that "Ansaldo Honolulu JV is fully committed to this project" and "will deliver … a world-class transit system on time, on budget and high in value."

On Thursday, Fontana told the HART board that the system’s first driverless train is slated to arrive on island for testing in June 2016.

Ansaldo and HART remain at an impasse over the cost to deliver four-car trains for the system instead of two-car models, Grabauskas said. HART officials have said the move would save the project about $20 million, while Ansaldo estimated the switch would cost about $4 million. There’s "no resolution yet but we’re still negotiating," he said Thursday. "I think we’re getting close."

Meanwhile, HART officials continue to scramble, using added staff at added cost, to secure all the right-of-way properties they need for the entire 20-mile line by the end of the year in order to stay on schedule to open the whole system in 2019. Legal challenges in the previous couple of years helped to stall that work.

"I think we’re in good shape based on the protections that we’ve put in place," Lui-Kwan said Thursday, referring to third-party bonds and legal obligation by Finmeccanica to make sure the project is completed even if there’s a sale. Nonetheless, he asked Grabauskas to do "as much due diligence as possible" on the potential buyers to make sure there aren’t any issues down the line.

HART response letter to Finmeccanica

Letter From Finmeccanica