Mexico revokes China rail deal

The Mexican government slammed the brakes on a prestigious high-speed rail project Friday, just five days after a Chinese-led consortium won the contract in a controversial bidding process.

The $3.75-billion (3.01-billion-euro)contract was awarded to the group led by China Railway Construction Corp Ltd. (CRC) after 16 other companies had pulled out of the race for the lucrative line, expected to move nearly 30,000 passengers daily between Mexico City and the commercial center of Queretaro.

Rail-bid rigged?

This raised questions among opposition lawmakers, who accused Transportation Minister Gerardo Ruiz Esparza of leaking favorable information to CRC. The consortium’s proposal came with a low-interest, 20-year Beijing-backed credit to cover the value of the venture.

German heavyweight Siemens, Canada’s Bombardier and France’s Alstom were among the international companies to drop their bids. Last month, Siemens’ Mexico rail chief told Reuters that the three corporations were denied more time to prepare their proposals.

Mexico’s Transportation Ministry says it expects to re-run the competition later this month under the same terms. Interested parties would have six months to submit their tender, but so far only Alstom has raised the possibility of launching another bid.

Presidential predicament

The debacle is seen as an embarrassment to Mexican President Enrique Pena Nieto, who is traveling to China next week. He is due to unveil a joint investment fund with Beijing, signaling an end to years of rivalry between the two countries over supplying the US market.

News of the cancellation sent CRC shares plummeting to their lowest since June 2013, dropping nearly 5 percent and dragging down Chinese stocks on Friday.

pad/hg (Reuters, dpa)