Mexico has paid $16m compensation to China Railways for cancelled contract

[TaiShang]

Mexico pays $16m compensation to China Railways for cancelled contract
3 December 2014 | By David Rogers

The government of Mexico has paid a consortium led by China Railway Construction Corporation (CRCC) more than $16m in compensation after it cancelled a high-speed rail contract.

The scheme to build a 220km line between Mexico City and the city of Querétaro was to have been constructed by CRCC along with four Mexican contractors. Rolling stock was to have been provided by China’s CSR and the total cost was put at $3.7bn.

The deal was cancelled by Mexican president Enrique Peña Nieto after complaints were made by members of the Mexican parliament over the way the deal had been done, and the fact that the Chinese-led consortium was the only bidder. The cancellation came despite the government’s acknowledgement that the contract was binding.

CRCC responded to the decision by launching an emergency plan and forming a team of legal experts “to safeguard the legal rights of the company”.

The waters were further muddied by revelations in the Mexican press that one of the Mexican companies in the consortium was connected to a $7m house partly owned by the president’s wife – who has since sold her stake in it. The South China Morning Post reported today that the Chinese firms would enter a fresh bid as soon as a the tender for the project was launched.

Professor Wang Mengshu, an adviser to the Chinese government on high-speed rail projects, said: “We are confident that the terms we offer will still compare favourably against other bidders.” He added that the $16m had been paid, but that it may not be the final compensation figure. He said it had not yet been decided whether the four Mexican firms who were part of the consortium would take part in the new bid.

 

[BoQ77]

Does it mean that China has no hope to win this deal again?

 

[TaiShang]

Chinese-led Consortium To Bid Again for Mexico High-Speed Rail Project
12/02/2014

CRH380 ( China Railway High -speed) Harmony bullet trains are seen at a high-speed train maintenance base in Wuhan , Hubei province, Dec 25, 2012 . [Photo/Agencies]

A Chinese-led consortium plans to retender for Mexico's $3.75 billion high-speed rail project, after the Latin American nation abruptly cancelled its earlier win, according to sources close to one of the firms involved.

Mexico revoked the contract awarded to the consortium, made up of China Railway Construction Corp , CSR Corp and four other Mexican firms, on Nov 7 after opposition lawmakers claimed it was fixed. The consortium's bid was uncontested. The country said it would re-run the tender later under the same terms.

"Will we continue to bid with CRCC? - that is a definite yes," said an official from CSR on Friday, who only wanted to be identified by his surname Xu.

A separate source close to the Chinese bid said CRCC was definitely going to tender again.

Xu declined to say whether the Mexican partners would remain in the consortium.

CRCC was "exceptionally shocked" by the cancellation of the contract and said it was looking at legal action to protect its rights.

The consortium has received a compensation of more than 100 million yuan ( $16.27 million ) from Mexico , said Wang Mengshuo, deputy chief engineer of China Railway Tunnel Group , to Beijing News .

According to the news, the contract revoke should be compensated by no more than 1 percent of the bid price, which equals to $44 million . The spokesperson of the CRCC declined to comment on the compensation.

 

[Kyle Sun]

Does it mean that China has no hope to win this deal again?

Maybe ! I am wondering which company will give a lower price than us.

 

[BoQ77]

Maybe ! I am wondering which company will give a lower price than us.

approaching the president by smarter way, I think. It could help.

 

[Kyle Sun]

approaching the president by smarter way, I think. It could help.

No matter what , company nees to make money.

 

[Aepsilons]

Hey, free $16 million.

 

[TaiShang]

Hey, free $16 million.

Under the agreement, the Chinese side was supposed to receive about 40 million, as I read. But they finally settled in 16 million. Maybe that's because the Chinese group will bid for the project again.

 

[terranMarine]

Under the agreement, the Chinese side was supposed to receive about 40 million, as I read. But they finally settled in 16 million. Maybe that's because the Chinese group will bid for the project again.

40 mln? , China better get the project otherwise 24 mln wasted lol. Still 16 mln is a very nice bonus

 

[opruh]

$16 million is peanuts to China

 

[Edison Chen]

Hey, free $16 million.

No...not free, the feasibility study for this huge project costs even more than the total compensation.

Mexico has a tradition of obligation default, a country with no credibility at all.

 

[Sanchez]

$16 million is peanuts to China

I would like to have some peanuts...

 

[Aepsilons]

No...not free, the feasibility study for this huge project costs even more than the total compensation.

Mexico has a tradition of obligation default, a country with no credibility at all.

Well in that case maybe the Mexicans can offset that with their ever so famous hot peppers. (@Keel recommended this in a past convo).



PS. This is a factor we have to realize when dealing with a nation whose citizens are literally jumping the border every year. Lol.

 

[Keel]

I think we dont need to rush and accept this as the final settlement because $16 mio is really nothing in view of the amount of time and efforts we'ver spent PLUS the exposure of very valuable trade secrets to Mexico which can literally sell it to our competitors for a good price.

Start writing a legal letter rejecting the compensation. The amount is less than half of the stipulated sum for proper compensation. Put pressure on the Mexicans even though the Mexican's gesture is in fact legitimising our bid and sealing-up of the foul mouths against us.

Go on with the new bid irrespective of the above pending case and to point out in salient terms that these 2 cases (compensation and the new tender) are not mutually exclusive. Wait for the outcome of the new tender. Upon this revelation, then our next step on the compensation.

 

[Galad]

China(and Russia) should never bother invest its hard-earned money in countries which are basically USA colonies.In such countries USA corporations and generally speaking any West ones will always have upper hand.In such countries West interests will always have priority. Local quislings will make sure of it.Investment,new jobs for population,national interest mean nothing for them.Contract was cancelled by order despite all of the weasel talk.