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Mexico cancels Chinese bullet train deal

November 7, 2014

MEXICO CITY – Mexico abruptly withdrew a multi-billion-dollar deal Thursday 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 $3.75 billion contract to the China Railway Construction Corp. 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 the Televisa network that Peña Nieto had made the decision “moments ago” and that the bidding would start over.

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 Monday to build the 210-kilometer (130-mile) 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 (APEC) summit and a two-day state visit in his latest effort to forge closer ties with the Asian powerhouse.

The high-speed rail project is part of Peña 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 300 kilometers per hour, reducing the commute between Mexico City and Queretaro from two-and-a-half 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.

While Mexico has freight railways, the country now only boasts some tourist trains after regular passenger lines disappeared following the sector’s privatization in the 1990s.

Mexican and Central American migrants have illegally hitched rides on top of a cargo train dubbed “La Bestia” (The Beast) to head north to the United States, a risky trip that has killed or maimed many passengers.

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