Mexico wants to upgrade its ageing rail network with a high-speed rail link between Mexico City and Queretaro

China 'surprised' as Mexico revokes high-speed rail deal

China has expressed surprise at Mexico's decision to revoke a £2.36bn high-speed rail contract with a Chinese-led consortium.

The decision to scrap the deal, which was awarded on Monday, was made ahead of a state visit to Beijing by President Enrique Peña Nieto this week following accusations from Mexican opposition politicians that the government was favouring the group led by China Railway Construction Corp.

Mexico wants to build a 210km line to connect Mexico City and the central city of Queretaro to move 27,000 passengers a day at speeds of up to 300 km/h (186 mph), but the project will cost 50.82 billion pesos (£2.36bn) to build and operate for five years.

The Chinese-led consortium, which includes several Mexican companies, became the sole bidder after 16 other groups pulled out and the proposal came with a 20-year, Chinese government-backed credit to cover most of the project's value, at interest rates below those available even to Mexico's government.

Opposition lawmakers questioned Transportation Minister Gerardo Ruiz Esparza over the deal on Thursday, accusing the government of providing information to help the Chinese-led consortium and its Mexican partners, but China yesterday said that the company involved had strictly followed the bidding procedure.

An unnamed spokesman from powerful economic planner the National Development and Reform Commission said Mexico's decision was "because of domestic factors", according to China's official Xinhua news agency.

"It had nothing to do with the Chinese enterprise, and the Chinese government hopes that the case could be settled properly as soon as possible," the spokesman said.

"It is surprising to hear Mexico decided to scrap the rail deal as the Chinese enterprise has been strictly following the public bidding procedures and requirements, and the bidding content complies with the requirements of the Mexican government," he added. "The Chinese government encourages enterprises to participate in infrastructure construction in Mexico in a mutually beneficial way, and hopes the Mexican government could create a fair competition environment for these enterprises."

China Railway Construction is "exceptionally shocked" by the decision, and may take legal steps to protect its rights, Xinhua quoted the company as saying later on Sunday. CRC said that it had respected the bidding process "from start to finish", Xinhua added.

Mexico's Communications and Transport Ministry, which has defended the bidding process, said on Friday it expects to re-run the tender in late November under the same terms, and would keep it open for six months to enable all interested parties to participate.

"The president wants this project which is so important for Mexico not to be questioned, to have absolute clarity," Ruiz Esparza said. "We expect more participation from train-makers in the new tender."

China Railway Construction can take part in the new tender and could be eligible for compensation because Mexico's government withdrew the contract, he added.

Germany's Siemens, Canada's Bombardier and France’s Alstom were among the companies that originally expressed an interest in the project, but Siemens' Mexico rail chief told Reuters last month that the three companies had a request for more time to prepare a bid denied by the transport ministry.

An Alstom spokeswoman said the group would consider a tender re-launch, but would need six to eight months to draw up an offer. Bombardier spokesman Marc Laforge declined to comment on whether the company would bid. Siemens also declined to comment.

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