MEXICO CITY, (Reuters) – Mexico has revoked a $3.75 billion high-speed rail contract from a Chinese-led consortium after its uncontested bid prompted an outcry from lawmakers, souring a state visit to China next week by President Enrique Pena Nieto.
After the contract to build the link was awarded on Monday, opposition politicians accused the government of favoring the group led by China Railway Construction Corp Ltd, the sole bidder.
Mexico’s communications and transport ministry, which has defended the bid process, said yesterday it expects to re-run the tender in late November under the same terms, and would keep it open for six months to enable all interested parties to participate.
“The president wants this project which is so important for Mexico to not be questioned, to have absolute clarity,” Transportation Minister Gerardo Ruiz Esparza said.
“We expect more participation from train makers in the new tender,” he added. China Railway Construction can take part in the new tender and could be eligible for compensation because Mexico’s government withdrew the contract, he said.
Since Pena Nieto took office in late 2012, he has tried to forge closer ties with China after years of manufacturing rivalry between two nations seeking to supply the U.S. market.
Announcing the contract on Monday, Mexico’s government said the 210-km (130-mile) line to connect Mexico City and the central city of Queretaro would cost 50.82 billion pesos ($3.74 billion), including the build cost and five years of operation.
The proposal came with a 20-year, Chinese government-backed credit to cover most of the project’s value, at interest rates below those available even to Mexico’s government.
News of the cancellation helped to drag down Chinese stocks yesterday and is an embarrassment for Pena Nieto ahead of his trip to China. He is due to unveil a joint investment fund with China, which has so far invested a tiny fraction in Mexico of the billions of dollars it has spent in Latin America.The fund could be worth up to $5 billion, officials say.
China’s CSR Corp Limited and China Railway Construction, both involved in the bid, could not immediately be reached for comment by Reuters. Chinese financial news magazine Caixin, however, reported that both companies said they were unaware and surprised when contacted for confirmation.
Shares in China Railway Construction shed nearly 5 percent in their biggest drop since June 2013 after the news.
