Sri Lanka dumps Chinese company ahead of its PM Ranil Wickremesinghe's India trip

COLOMBO- Sri Lanka has reversed a decision to award a $300million (approximately Rs 2,211 crore) housing deal to China in favour of a joint venture with an Indian company, the government said, ahead of a visit by the prime minister to its South Asian neighbour.

Prime Minister Ranil Wickremesinghe will meet his counterpart PM Narendra Modi on Saturday in New Delhi for talks. The two countries have long-standing ties, partly because of cultural and ethnic links with Tamils, many of whom live in the island’s north and east.

In April, state-run China Railway Beijing Engineering Group Co Ltd had won a tender worth over $300 million to build 40,000 houses in Jaffna, with China’s Exim bank to provide funding. But the project was halted after residents demanded brick houses, saying they preferred their traditional type of dwelling instead of the concrete structures the Chinese firm had planned.


On Wednesday, government spokesman Rajitha Senaratne said the cabinet had approved a new proposal for 28,000 houses worth Rs 3,580 crore ($210 million) to be built by Indian firm ND Enterprises and two Sri Lankan firms in the north and east. The planned homes are part of a total requirement of 65,000, he added.

“The rest of the houses will be given to firms which are ready to build them at lower prices,” Senaratne said, adding that China could also be considered in future for the remaining housing projects.

In Beijing on Thursday, foreign ministry spokesman Lu Kang told a news briefing China’s cooperation with Sri Lanka was derived from consultations on an equal footing and he hoped that cooperation would be viewed objectively.

India has built 44,000 houses in the country in the first phase of reconstruction after a 26-year-war with Tamil Tiger rebels, and plans to rebuild Palaly airport and Kankesanthurai harbour, both damaged in the conflict.

Moreover, Sirisena’s election as Sri Lanka president had also been seen as a “gain” for India because of the overt tilt of his predecessor and rival, Mahinda Rajapaksa, towards China.