Mexico denies China Railway payment before new bid

Updated: 2014-12-08 04:52

By Zhang Yuchen in Beijing(China Daily Latin America)

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The Mexican railway authority denied the $16.2-million compensation to a Chinese railway company after the company said it would bid again for Mexico's high-speed rail project, the bidding of which they won was scrapped by the Mexican government.

The ministry of Communications and Transportation of Mexico put the denial on its website on Dec 3 in Mexico time that no payment of any compensation to China Railway Construction Corporation who succeeded to bid a Mexican high-speed rail project nearly a month ago.

The contract, worth $3.75 billion, had been awarded to China Railway and its partners on Nov 3, after all other potential bidders bowed out, arguing that they did not have enough time to prepare their bids in the two-month process.

A few days after the Chinese Railway Construction Corporation won the case, the Mexican government cancelled the case on Nov 11. Weeks later some rumors said the government has compensated one interested consortium with 100 million yuan ($16.25 million).

Media reported on Dec 1 that Chinese enterprises, including China Railway Construction and CSR Corp, will place their bid as soon as a new tender for the project is begun, according to Professor Wang Mengshu, a senior scientific advisor to the Chinese government on high-speed rail projects, as quoted in the South China Morning Post. Wang is also deputy chief engineer of construction company China Railway Tunnel Group.

The railway authority of Mexico once said the new round of bidding would have begun in the end of November but no further information has been declared so far.

Though there's no confirmation of the tendering by the four Mexican companies in the first bid, some international competitors including some prominent international companies such as Siemens, Bombardier, Mitsubishi, and Alstom have shown their interest in the new tendering. The waiting process before bidding is estimated to be from three to six months.

At the same time, the Chinese government is merging the country's top two train-makers, China CNR and CSR Corp, to support its overseas high-speed rail campaign, which remains complex in terms of corporate culture and finances.

About two weeks after the cancelation, CRCC announced it had signed a $12 billion contract to build a railway along the coast of Nigeria, the largest single overseas construction deal won by a Chinese firm. In the first nine months of 2014, CRCC has inked 115 billion yuan in overseas contracts.

The reason for the previous cancelation from Mexican government was the winning case of the Chinese company threatened legal action over its decision to build the rail. Officials from the Mexican government said the contract's cancellation was purely a reflection on the government's efforts on “strengthening the absolute clarity, legitimacy and transparency” of the bidding process.

The living standards in Mexico have fallen further behind most of emerging-market economies, according to Dani Rodrik, economist and professor of Social Sciences at the Institute for Advanced Study in Princeton, US. He said while the country's foreign trade prospers, the economic growth continues to lag. Mexico has seen its imbalance economic development in the past decades put the country's economy in the position of taking care of itself.