Business News from Sri Lanka: Proactive negotiations are ongoing to finalize a crucial barter agreement between Sri Lanka and Iran to resolve the impasse over tea exports and oil import payments.
The Ceylon Petroleum Corporation (CPC) has a long outstanding $240 million payment liability on Iranian purchased oil. A $10 million per month of tea exports are being worked out for two years as a possible settlement among U.S.-led sanctions on Iran.
“The Sri Lankan Tea Board is still in discussion with various government institutions and departments, particularly the CPC, to speed up the process of signing an agreement with Iranian tea importers to enable a barter system to supply Ceylon Tea,” Sri Lankan Tea Board Chairman Lucille Wijewardena said. In 2018, Iran imported $129 million in Ceylon Tea worth 23.9 million kilograms. Since a number of institutions and departments within both countries need to be agreed on the barter system, he pointed out that it was time-consuming to arrange the necessary logistics. “In this regard, we have had long discussions with Iranian officials and we hope to reach an agreement soon,” stressed Wijewardena.
He also said that once all is finalized, the Ministry of Plantation Industries and the Ministry of Development of Petroleum Resources will submit a joint Cabinet paper to seek approval for the proposal. “Most of the administrative work is finalized now. After seeking Cabinet approval, we will be able to start tea exports to Iran before the end of the year, “added Wijewardena.
The tightening of UN and US economic sanctions against Iran has had a tremendous negative impact on the prices of Colombo Tea Auction.
As tea is considered a food item that has been granted clearance for trading on humanitarian grounds by the United Nations and the United States, Wijewardena pointed out that the problem for Sri Lanka was the non-availability of a currently blacklisted banking system in Iran. “Banks refuse to participate in dollar transactions with Iranian banks because of trade sanctions imposed by the US on dollar transactions with Iranian banks,” he said.