Sri Lanka reverses $300m housing deal

Sri Lanka has reversed a decision to award a $300-million 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 Narendra Modi on Saturday in New Delhi, the Indian capital, 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 won a tender worth more than $300 million to build 40,000 houses in Jaffna in Sri Lanka’s north, 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 35.8 billion rupees ($210 million) to be built by Indian firm ND Enterprises and two Sri Lankan firms in the north and east.