Stalemate in SL-Iran barter trade pact
View(s):Sri Lanka’s exports of Ceylon tea in exchange for reducing debts on oil purchases from Iran is still held up in talks as the state-run petroleum company wants further guarantees while other elements are seeking to stall these trade deals.
Sri Lanka is still continuing discussions between the Ceylon Petroleum Corporation (CPC) and the Treasury and the Sri Lanka Tea Board together with the Iranian authorities to finalise matters pertaining to the tea for oil deal. CPC is said to be continuously concerned about obtaining required assurances to ensure that its debts will be reduced by the currently blacklisted firm Iran Petroleum Company (IPC).
CPC wants to ensure their debts will be offset against the export of the teas and since the IPC is a blacklisted organisation the CPC will not be directly dealing with them under the circumstances, official sources told the Business Times. CPC’s oil debts of US$240 million will be offset against the tea exports at the rate of US$5 million per month.
In this respect, the CPC wants to obtain a guarantee from IPC and Iran that under the new arrangement their debts would be settled when tea exporters sell their teas to buyers in Iran who would make the payments to the oil companies.
In turn the CPC has agreed to pay the tea exporters some of the money directly thereby avoiding any financial transaction between the two countries in the sale of tea.
It is learnt that though the Iranian authorities are in agreement there continues to be some uncertainty in the discussions as other (unnamed) elements, according to sources, are seeking to stall this barter arrangement.
The US has placed sanctions on Iran as a result of which no direct transactions can be carried out with the latter through banks. However, countries like India have made inroads into trading with Iran despite the sanctions through a barter system, which is what is being envisaged by Sri Lanka as well.
In the meantime, local tea exports for the month of July recorded its best July month in five years with a surge of 13 per cent increase compared to the same period 2019.
With more quantities starting to pick up due to a good demand for Ceylon Tea, 2020 has recorded one of the best July months since 2016, Asia Siyaka Commodities CEO Anil Cooke stated.
He noted that export figures for July showed 28 million kg for this year compared to 24.8 million kg that was about a 13 per cent increase compared to last year.
Revenues recorded a 24 per cent increase with earnings made at Rs.24.3 billion as against Rs.19.5 billion last year.
(SD)