Carmelton, the consortium supposed to build the Carmel Tunnel in Haifa, yesterday petitioned the courts to force Israel Discount Bank to honor the financing arrangement for the project.

According to the suit filed at the Tel Aviv District Court, on August 9 Discount informed Carmelton that it was retracting its agreement to lend NIS 709 million for the project after unilaterally concluding that the project was no longer worthwhile.

Carmelton added that to its knowledge, the reason for the back-tracking on the deal was Discount Bank's own capital adequacy problems, which it was addressing by attempting to reduce its credit portfolio.

According to Carmelton, "Discovering the lack of economic viability of a deal after signing does not grant [the bank] the right not to honor the agreed commitments that [the bank] had taken upon itself."

The consortium argues that till now, it has invested NIS 20 million in the tunnels project, relying on the bank's financing commitment, and that the bank's announcement now puts the entire project in danger.

The project, which is an attempt to slash travel time across Haifa by paving roads through tunnels underneath the city's hilly topography, is currently nearing the end of the planning approval stage.