China firm mulls legal action after Mexico scraps rail deal

A leading Chinese construction firm on Sunday expressed shock over Mexico's abrupt cancellation of a USD 3.75 billion contract to build a high-speed rail link and warned legal action to protect its interests.

Beijing: A leading Chinese construction firm on Sunday expressed shock over Mexico's abrupt cancellation of a USD 3.75 billion contract to build a high-speed rail link and warned legal action to protect its interests.

The statement from China Railway Construction Corporation (CRCC) came after Mexico's Ministry of Communications and Transport on Thursday announced it will annul the contract due to public concerns about the bidding process.

Earlier, a Chinese-led consortium including the CRCC and several Mexican firms had won the contract to build a 210-kilometre high speed rail link connecting Mexico City with the industrial hub of Queretaro to the north.

But President Enrique Pena Nieto said he wanted to avoid "any doubts about the legitimacy and transparency" of the bidding process.

Pena Nieto made the surprise decision three days before flying to China for an Asia-Pacific Economic Cooperation (APEC) summit.

The CRCC said it has set up a legal team after being notified of the decision and vowed to resort to legal means to protect its legitimate interests if necessary, state-run Xinhua news agency reported.

It stressed that the firm has strictly followed the public bidding procedures and requirements, and the bidding content complied with the requirements of the Mexican government.

"The Mexican side bears whole responsibility for scrapping the deal. It has nothing to do with our company. We are closely watching any further developments," said the CRCC.

Construction of the rail line, part of Mexico government's plan to boost Latin America's second-biggest economy, was due to start in December, with services running from 2017.

The Chinese-led group was the only one to bid by the October 15 deadline.

Mexico would become the first Latin American nation to have a bullet train after Brazil and Argentina postponed their own high-speed rail projects.

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