Mexico cancels high-speed rail job three days after giving it to Chinese consortium

Late yesterday the government of Mexico withdrew the $3.7bn contract it had awarded on Monday to a Chinese-led consortium to build the country’s first bullet train.

The consortium, which included the China Railway Construction Corp., Chinese rolling stock manufacturer CSR, and local Mexican firms, had been the only group to submit a bid, which caused the Mexican government concern.

Transport Minister Gerardo Ruiz Esparza said on television last night that Mexican President Enrique Pena Nieto (pictured) had decided "moments ago to revoke the November 3 ruling and restart" the bidding process, news agency AFP reported. 

The minister said the deal was revoked to avoid "any doubts about the legitimacy and transparency" of the bidding process after only one group had bid.

A person who picked up the phone at CSR said the company had not yet had a formal response and was trying to contact the Mexican side, reported The Wall Street Journal. 

President Pena Nieto has made the shock decision just before he flies to China on Sunday for an Asia-Pacific Economic Cooperation (APEC) summit and a two-day state visit in his latest effort to forge closer ties with Beijing.

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

The Chinese-led group was the only one to make a proposal by the October 15 deadline.

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

Today in China, shares of China Railway Construction fell more than 5% in Shanghai Stock Exchange trading. 

CSR shares have been halted amid reports in official Chinese media that the Chinese government plans to combine the company with rival China CNR Corp, reports The Wall Street Journal. 

The transport minister, Ruiz Esparza said on television that the contract would be opened for bidding again in the near future and this time, interested companies would be given more time to present offers.

The railway is one of several that the Peña Nieto administration plans to build as part of an ambitious infrastructure program that includes long-distance passenger rail travel, which has been virtually nonexistent in Mexico for decades.

In a statement released after his television appearance, Ruiz Esparza said that although the original contract had been properly bid, the president believed there should be no doubts "on the part of society or the congress" about such an important project.

Despite this setback the Chinese rail industry has been cementing its presence in Latin America and developing economies worldwide.

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