Published On: Fri, Nov 7th, 2014

Peña Nieto revokes multi-billion-dollar deal with a Chinese consortium to build high speed train

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On Thursday November 10th, Mexico abruptly withdrew a multi-billion-dollar deal with a Chinese-led consortium to build the country’s first bullet train after concerns were raised about the bidding process.

The government had awarded the US$3.75 billion contract to the China Railway Construction Corporation and four Mexican partners on Monday after the group had been the only one to submit a bid.

But President Enrique Peña Nieto scrapped the deal to avoid “any doubts about the legitimacy and transparency” of the bidding process, said Transport Minister Gerardo Ruiz Esparza.

Ruiz Esparza told Televisa network that Peña Nieto had taken the decision “moments ago” and that the bidding process would start again.

The transport ministry said in a statement that the president made the decision “due to the doubts and concerns that have emerged in public opinion.”

More time will be allotted to encourage more train-makers to make proposals, the ministry said.

The Chinese-Mexican consortium faced no opposition when it was picked on Monday to build the 210km high-speed rail between the capital Mexico City and the central manufacturing hub of Queretaro.

Peña Nieto surprisingly revoked the deal three days before flying to China for an Asia-Pacific Economic Cooperation summit and a two-day state visit in his latest effort to forge closer ties with Beijing.

Mexican president Enrique Pena Nieto will attend the Apec summit in Beijing and make a two-day state visit in his latest effort to forge closer ties with China. Photo: EPA

Mexican president Enrique Pena Nieto will attend the Apec summit in Beijing and make a two-day state visit in his latest effort to forge closer ties with China. Photo: EPA

The high-speed rail project is part of Pena Nieto’s plan to bring back passenger trains to Latin America’s second-biggest economy.

But only one group submitted a proposal by the October 15 deadline.

The transport ministry said at the time that 16 companies decided against entering the contest, including industry giants Mitsubishi of Japan, Alstom of France, Bombardier of Canada and Siemens of Germany.

It did not explain why the companies shied away from making bids.

When announcing the winner on Monday, Ruiz Esparza said it was not unusual for just one group to bid for a high-speed train project, noting that on average, only two companies make bids for such projects worldwide.

Prior to scrapping the deal, the government had expected construction to start in December and operations to begin in 2017.

The project aims to carry 23,000 passengers per day at speeds of up to 300km/h, reducing the commute between Mexico City and Queretaro from 2 ½ hours to 58 minutes.

Mexico would become the first Latin American nation to have a bullet train after Brazil and Argentina postponed their own high-speed rail projects.

Source: http://www.scmp.com/news/world/article/1634225/fast-train-nowhere-mexico-derails-chinese-bullet-train-deal

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