Govt wants Indian subcontinent firm involved in $400 million port contract

(Reuters) -- Sri Lanka is seeking a consortium that must include a company from the Indian subcontinent to bid for a $400 million contract to build a port terminal, the ports minister said on Thursday. The move to include an Indian subcontinent firm could neutralise growing Chinese influence in Colombo's port.

Arjuna Ranatunga, Sri Lanka's ports minister, said at least a 20 percent stake in consortia bidding for the Colombo East terminal construction contract must be held by a firm from the Indian subcontinent.

The planned terminal is near Colombo International Container Terminals (CICT), operated by China Merchants Holdings on a 35-year build-operate-transfer basis, and a $1.4 billion 269-hectare reclaimed port city, also built by a Chinese firm.

"We don't specifically say Indian. But we need to understand up to 65 percent of our cargoes go to India and 72 percent to the subcontinent," Ranatunga told a Foreign Correspondents' Association (FCA) forum.

President Maithripala Sirisena's government has already renegotiated the port city deal and stopped Chinese getting a freehold on 20 hectares of land after India opposed the move.

Ranatunga said two Chinese firms were among the 20 companies that have already bought the bidding documents for the new terminal contract. The deadline for bids is Aug. 31.

"Even Chinese companies have to form a consortium with a minimum 20 percent stake from a subcontinent company. It can't be a Sri Lankan company. But it could be either a Pakistan or Bangladesh company," Ranatunga said. A 15 percent stake in the new terminal will be owned by the state-owned Sri Lanka Ports Authority (SLPA).

Ranatunga said the planned port terminal would be the country's best, with a depth of between 19-21 metres and almost double the container handling capacity of the Colombo port.