Mexico to compensate China's CRCC for canceling rail project

A CRH train that runs on Lanzhou-Urumqi High-Speed Railway stops at Urumqi South Railway Station in Urumqi, Xinjiang Uygur autonomous region, on Dec 26, 2014. [Photo/Xinhua]

The Chinese company at the helm of a consortium that won a $3.75 billion high-speed rail contract last year which was later revoked will be compensated almost 20 million pesos ($1.31 million), a transport ministry official said on Thursday.

The contract, for which the consortium led by China Railway Construction Corp Ltd (CRCC) was the only bidder, was abruptly revoked last fall shortly after it was awarded.

Earlier this year, after the Mexican government relaunched the bid and then canceled it for a second time citing budget cuts, the CRCC gave the SCT a list of costs incurred during the tender and requested compensation.

Yuriria Mascott, a deputy minister at Mexico's Communications and Transport Ministry, told reporters on Thursday that the government had completed an analysis of CRCC's costs.

"The legal team informed me that what is to be expected is almost 20 million (pesos)" in compensation, she said.

According to previous report by China Daily, Luis Videgaray Caso, Mexico's secretary of finance and public credit, announced that the "indefinite suspension" was the result of falling oil prices and the need to cut public spending. The federal government derives about a third of its revenue from the oil sector. The minister added that the project to build a $9.2 billion international airport in Mexico City would not be affected.

"We feel really sorry about the decision. Chinese companies have invested much in bidding for the project," said China's National Development and Reform Commission (NDRC) in a statement.

China hopes the Mexican government will deal with the problems caused by the suspension of the project appropriately, effectively protecting Chinese companies' legitimate rights, and adopt active measures to promote pragmatic cooperation between the two countries, the statement said.

"We note the Mexican government's decision, and China hopes the Mexican government can properly deal with subsequent problems," a Chinese foreign ministry spokesperson told Xinhua News Agency.

Also Mexico needs to "value and properly cope with the huge manpower and money Chinese enterprises invested in the project bid, and carry out measures for further bilateral cooperation," said a spokesperson for the National Development and Reform Commission, China's top economic planning body.