The cabinet of ministers had given the go ahead for MT Hojgaard to build a port in the coastal town of Oluvil, information minister Anura Yapa said after this week's cabinet meeting.
The project is funded by the government of Denmark. In rupee terms the contract is valued at 7.74 billion.
The Oluvil Port project development plan consists of a commercial port and a basin for fishing craft, the ports ministry had said earlier.
Two rubble mound breakwaters would enclose a total water area of around 16 hectares in the first stage of the project, of which 10 hectares would be used for commercial harbour activities and balance for fisheries activities.
The basin of the commercial harbour would be dredged to eight metres in the project's first stage to cater for 5,000 DWT vessels and fishing craft.