UPDATE 5-Mexico scraps $3.75 bln China rail deal ahead of state visit

Fri Nov 7, 2014 12:14pm EST
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(Adds comment from lawmaker over reasons for cancellation, company statements)

By Michael O'Boyle and Dave Graham

MEXICO CITY Nov 7 (Reuters) - Mexico has revoked a $3.75 billion high-speed rail contract from a Chinese-led consortium after its uncontested bid prompted an outcry from lawmakers, souring a state visit to China next week by President Enrique Pena Nieto.

After the contract to build the link was awarded on Monday, opposition politicians accused the government of favoring the group led by China Railway Construction Corp Ltd, the sole bidder.

Mexico's communications and transport ministry, which has defended the bid 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 to not be questioned, to have absolute clarity," Transportation Minister Gerardo Ruiz Esparza said.

"We expect more participation from train makers in the new tender," he added. China Railway Construction can take part in the new tender and could be eligible for compensation because Mexico's government withdrew the contract, he said.

Since Pena Nieto took office in late 2012, he has tried to forge closer ties with China after years of manufacturing rivalry between two nations seeking to supply the U.S. market.

Announcing the contract on Monday, Mexico's government said the 210-km (130-mile) line to connect Mexico City and the central city of Queretaro would cost 50.82 billion pesos ($3.74 billion), including the build cost and five years of operation.   Continued...