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Local politics killed China’s $3.7-billion high-speed rail deal with Mexico

Reuters/Edgard Garrido
Not so fast.
This article is more than 2 years old.

Just days after announcing that a group led by China Railways Construction would build a $3.7 billion high-speed rail link from Mexico City to the center of the country, Mexico’s government cancelled the deal, citing the desire to avoid “doubts about the legitimacy and transparency” of the bidding process.

That process has certainly raised plenty of questions.

As many as 16 companies were reportedly interested in the 210-kilometer (130-mile) project, including Germany’s Siemens, France’s Alstom, and Bombardier of Canada. But in the end there was only one bidder—the China Railways consortium, which included four Mexican firms — Constructora Teya, Grupo GIA, Promotora y Desarrolladora Mexicana, and GHP Infraestructura Mexicana.

China Railways’ winning bid was 18% higher than the original transportation ministry estimate, the Yucatan Times reports. It was also 85% financed by the state-run Export-Import Bank of China.

The opposition National Action Party in Mexico found several problems with this situation. Other potential bidders’ requests for more time to put together an offer were denied, the party said. It alleged that ”a group close to the current president looks to benefit” from the project, because Constructora Teya has ties to a company that rented planes to Mexican president Enrique Peña Nieto’s election campaign.

Beijing, which has been winning high-speed rail deals around the world, is certain to be surprised by the cancellation, which was first announced on air by Mexico’s transport minister. Peña Nieto will have plenty of opportunity to explain what happened to his Chinese counterpart Xi Jinping—he travels to China next week.

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