April 1, 2015

Mexico looks to rebuild bridges with China through invitation to bid on airport project

Mexican President Enrique Pena Nieto has two major construction projects in mind that he intends to leave as a legacy of his time in office. The first is a high-speed train linking Mexico City with the city of Queretaro, while the second is a new 3 runway airport for Mexico City which would have the capability of dealing with up to 50 million passengers per annum by 2020, with a view for further expansion to 6 runways and 120 million passengers per annum. However relations between Mexico and China became strained over the Queretaro railway line when a consortium run by CRCC (China Railway Construction) had the US$3.75bn rail contract it had been awarded revoked. This caused much consternation among the Chinese, though it did not help matters that a few days after the contract was revoked, it was revealed that Pena Nieto’s wife had purchased a luxury property from one of the Mexican firms who was in the winning consortium. This situation was made even worse when the media disclosed that the president, plus the finance minister, had either bought or used homes owned by the same government contractor.
In January the tender process was reopened, but then shortly afterwards it was put on permanent hold. The reason given this time was due to the dramatic fall in the price of oil, a revenue source Mexico depends on for one third of its federal budget and without such revenue, Mexico is unable to fund the project. With CRCC having invested heavily in preparing a contract bid for the railway, the opportunity for the Chinese to bid on certain projects involving the airport is Mexico’s way of trying to smooth the waters and continue efforts to create a stronger financial link with China – one which Mexico has shied away from in the past, tending to deal more with the USA. However a Chinese consortium would fit well with the project as the airport’s architect, Sir Norman Foster, designed Terminal 3 at Beijing’s airport.
The estimated budget for the airport is US$11bn and Mexico’s transport ministry spokesman, Rodolfo Gonzalez, has made it clear that the bidding process will not favour the Chinese per se: “The desire is that everyone who is best equipped, who has the best technical and financing capabilities, should participate.” However Mexican transport and communications minister, Gerardo Ruiz Esparza, informed Chinese officials while visiting Beijing that Mexico would welcome China’s involvement in the airport construction project. “This is kind of paying a favour to the Chinese companies who were denied the Mexico-Queretaro train,” confirmed Daniel Avila, who is a senior member of the Mexican Senate’s Asia-Pacific committee.
A Chinese foreign ministry spokeswoman, Hua Chunying, made it clear she was unaware of the airport project, though she added: “We have always said that we support able Chinese companies to go out and have cooperation with other countries on infrastructure construction and building.”



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