Mexico pays $16m compensation to China Railways for cancelled contract

The government of Mexico has paid a consortium led by China Railway Construction Corporation (CRCC) more than $16m in compensation after it cancelled a high-speed rail contract.

The scheme to build a 220km line between Mexico City and the city of Querétaro was to have been constructed by CRCC along with four Mexican contractors. Rolling stock was to have been provided by China’s CSR and the total cost was put at $3.7bn.

The deal was cancelled by Mexican president Enrique Peña Nieto after complaints were made by members of the Mexican parliament over the way the deal had been done, and the fact that the Chinese-led consortium was the only bidder. The cancellation came despite the government’s acknowledgement that the contract was binding. 

CRCC responded to the decision by launching an emergency plan and forming a team of legal experts "to safeguard the legal rights of the company".

The waters were further muddied by revelations in the Mexican press that one of the Mexican companies in the consortium was connected to a $7m house partly owned by the president’s wife – who has since sold her stake in it. The South China Morning Post reported today that the Chinese firms would enter a fresh bid as soon as a the tender for the project was launched. 

Professor Wang Mengshu, an adviser to the Chinese government on high-speed rail projects, said: "We are confident that the terms we offer will still compare favourably against other bidders." He added that the $16m had been paid, but that it may not be the final compensation figure. He said it had not yet been decided whether the four Mexican firms who were part of the consortium would take part in the new bid.

Story for GCR? Get in touch via email: [email protected]

Latest articles in News