CHINA Railway Construction Corp. (CRCC) looks poised to clinch a contract to build a US$3.75 billion Mexican high-speed train system even after its original winning bid was revoked when it became engulfed in a political scandal, say sources with knowledge of the bidding.

    Mexico will today reveal the fresh bid terms for the tainted train project linking Mexico City with the wealthy, industrial city of Queretaro, which was meant to be one of Mexican President Enrique Pena Nieto’s flagship infrastructure investments.

    People close to the Chinese rail giant or familiar with rival bids say CRCC is still likely to win, given its broad financing plan, its cheap high-speed technology and political support in Mexico.

    Last week, CRCC said it was confident of winning. In the last tender, Export-Import Bank of China agreed to finance 85 percent of the project.

    Since taking office in 2012, Pena Nieto has courted Chinese money to wean Mexico off its dependency on the United States. China has in recent years expanded its footprint in Latin America and is promising investments of US$250 billion over the next decade.

    Both Mexico and China have stressed the importance of the project, which would produce Latin America’s first high-speed trains, and showcase China’s expertise after it built the world’s largest high-speed rail network at home in less than 10 years.

    After 16 firms, including Siemens, Bombardier and Mitsubishi pulled out of the tender, leaving a consortium led by CRCC as the de facto winner.

    “The process was compromised from the outset, that’s without question,” said a person on the Chinese side of the original bid, who asked to remain anonymous.

    The controversy exploded when it surfaced that Grupo Teya, one of the Mexican firms in the CRCC-led consortium, was a subsidiary of a government contractor that owned a multi-million dollar home Pena Nieto’s wife was in the process of buying.

    The government revoked the contract Nov. 6, a few days before the Teya revelations were published. It has grappled with a conflict-of-interest scandal ever since.

    Mexico’s Communications and Transport Minister Gerardo Ruiz Esparza told lawmakers in late December that none of the Mexican firms in the original consortium will take part in the new tender, and it remains to be seen with which companies CRCC will now partner.

    An executive from a major European train manufacturer that pulled out from the earlier tender said the Chinese bid’s financing made it highly competitive. He added that his company could only finance building the trains, but not the tracks, stations and other infrastructure like the Chinese.

    The Mexican Government denies the process was designed to benefit the Chinese, and has welcomed the decision by CRCC to bid again.

    Specific terms of the CRCC financing could not be immediately learned. This time, though, China will offer less generous terms, said a source, as it believes its original winning bid was unfairly revoked over a homegrown Mexican political spat it had nothing to do with.

    The executive from the major European train manufacturer said that CRCC would be almost guaranteed to win if it joins forces with a less controversial, publicly listed Mexican builder, like ICA. If that happens, he said his firm would pull out.

    (SD-Agencies)