President Enrique Peña Nieto has rescinded the contract won by a Chinese-led consortium last week to build a high-speed railway in Mexico due to questions over the deal’s legitimacy. Opposition legislators have questioned the transparency of the deal, claiming that the Mexican firms in the consortium, including Prodemex, Constructora y Edificadora GIA, Constructora Teya, and GHP Infrastructora Mexicana, enjoyed special relationships with the president.

During bidding, 16 other companies expressed interest in the project. Canada’s Bombardier, France’s Alstom, and Germany’s Siemans—among others—requested additional bidding time to prepare proposals, but President Nieto rejected these requests. Now that the project is up for grabs again, other rail companies plan to take advantage of the opportunity.

China Railway Construction Corporation and CSR Corporation Ltd. would have lead the effort in building the $3.7 billion train—the Americas’ first—expected to create 60,000 jobs for Mexican workers.

The Export-Import Bank of China was due to finance 85 percent of the project, announced in 2012 by Mexican President Enrique Peña Nieto and hoped to be completed by December 2017. Although unconfirmed at the time, Mexico was expected to borrow the remaining 15 percent from China and possibly repay with natural resources, according to Wang Mengshu, a railway expert at the Chinese Academy of Engineering.

If the project follows the original plans, the track will eventually cover 210 kilometers from Mexico City to Querétaro—a major manufacturing hub and commuter destination—and trains will run at a maximum speed of 300 kilometers per hour. The railway is expected to transport up to 27,000 commuters a day and take 18,000 cars off the road in its first year of operation.

The absence of passenger trains in Mexico stands in sharp contrast to the country’s extensive freight rail system that was commercialized in the 1990s. For the first time since then, Mexico will have a train dedicated to public transportation—one that will hopefully eliminate the need for an expensive project to double highway lanes to handle the country’s growing traffic problem.

If China is once again chosen to contract on the railway, it too would benefit. In what could be the first overseas implementation of Chinese bullet trains, the Chinese members of the consortium would be responsible for developing all key technologies; manufacturing the trains, control systems, and track parts; and handling the line’s design, construction, installation, and operation maintenance. Success in Mexico could lead to future contracts in Brazil and the United States, which are both working on developing high speed rail transit systems of their own.

(Photo by Sjors Provoost via Flickr)

Posted by Lauren Dodillet