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Sri Lanka Awards to $300M Housing Build Contract to Indian Firm

October 19, 2018

The government of Sri Lanka has changed its mind and reversed a prior decision to award a $300 million housing construction deal to a Chinese joint venture firm.

That decision, made back in April, was a tender with China Railway Beijing Engineering Group Co Ltd. to build 40,000 houses in Sri Lanka’s northern region, in Jaffna. Funding was to be provided by China’s Exim bank.

The Chinese firm proposed building the homes out of concrete. When residents in the area complained of those plans because they were not brick houses, a more traditional approach in that region, Sri Lanka began to re-think the project.

On October 17, Sri Lanka’s new plan for the region’s housing was approved. It will result in 28,000 new brick homes to be built at a cost of 35.8 billion rupees ($210 million). Two Sri Lankan companies from the north and east, plus ND Enterprises, an Indian firm, will build out this phase of the work.

An additional 37,000 homes will be built for the area in a separate contract later. China is apparently in the running to build these, provided they can be built to the new requirements and at lower costs than before, according to Sri Lankan officials.

Both China and India have strong footholds in Sri Lanka’s construction bids.

India was behind the first phase of reconstruction in the northern part of the country, after the conclusion of a 26-year-long war with Tamil Tiger rebels. It has so far built 44,000 houses there. There are also plans for Indian firms to rebuild Kankesanthurai harbor and Palaly airport there.

China overtook India as a major builder. It has invested in construction of new ports, power plants, highways and other infrastructure as part of its “String of Pearls” strategic effort to create an array of ports friendly to China throughout the Asia-Pacific region.

Copyright: North America Procurement Council Inc., PBC