Tags: mexico | cancels | china | rail

Mexico Cancels $4.3 Billion China Deal on Doubts Over Bid

Friday, 07 Nov 2014 06:33 AM

Mexico canceled a contract for the construction of a high-speed train and ordered a new contest for the $4.3 billion deal, sending shares of the Chinese company that earlier won the bid tumbling.

President Enrique Pena Nieto decided to rescind the tender and give the process more time to get clarity, according to an e-mailed statement from the Communications and Transport Secretary. The government wants to avoid any doubt about the legitimacy and transparency of the bidding process, according to the statement.

Mexico’s president is visiting Beijing next week after China Railway Construction Corp. led a group that won the bid to build the line in central Mexico, marking the first large investment in transportation by a Chinese firm in the nation. The bidding process had come under scrutiny by the opposition National Action Party which said the sole bid by the group was too expensive and that insufficient time was given to other companies to present their projects.

China Railway Construction hasn’t received official cancellation notice from Mexico, the company said in an e-mailed response.

Its shares fell 5.8 percent, the most since July 2013, to HK$8.02 at the close of trading in Hong Kong today.

Fast Train

The Beijing-based company had said it will turn to the Export-Import Bank of China to help finance its $2.9 billion portion of the contract. The train will initially shuttle 27,000 passengers a day between the capital and the industrial hub of Queretaro City in 58 minutes, Mexico’s government said.

Communications and Transportation Minister Gerardo Ruiz Esparza had said earlier the construction cost of $3.2 billion is less than originally budgeted and Mexico had given companies since last November to prepare.

CSR Corp., a member of the group, is in merger discussions with China Northern Locomotive & Rolling Stock Industry Group Corp. The two biggest trainmakers in China, if they become one company, would have $33.6 billion in sales and $1.44 billion in net income in the past 12 months, according to data compiled by Bloomberg.


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Mexico canceled a contract for the construction of a high-speed train and ordered a new contest for the $4.3 billion deal, sending shares of the Chinese company that earlier won the bid tumbling. President Enrique Pena Nieto decided to rescind the tender and give the...
mexico, cancels, china, rail
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2014-33-07
Friday, 07 Nov 2014 06:33 AM
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