July 22, Colombo: Sri Lanka is considering a plan to settle payments to Iran for previous oil purchases by exporting tea to the country at equivalent values, according to an Iranian media report.
The Sri Lanka Tea Board announced that a total of $250 million that the country's state-owned fuel suppler, Ceylon Petroleum Corporation (CPC) owed Iran could offset payment for a year of tea export to the country, FARS news agency reported.
The Board said the Central Bank of Sri Lanka was already looking into the technicalities involved.
"If the CPC pays us, we can continue the export of tea to Iran as there is no ban on this commodity. The amount the CPC owes Iran can offset payment for a year of tea export to Iran," Chairman of Sri Lanka Tea Board Lucille Wijewardena was quoted as saying.
Wijewardena said that a decision over the issue would be adopted within next week, adding that any move by the Central Bank would also determine the future course of tea trade with Tehran in light of returning sanctions.
In relevant remarks earlier in July, Sri Lankan officials had emphasized that negotiations had started with international banks to find mechanisms to maintain tea exports to Iran once the sanctions return.
On the same front, Plantation Industries Minister Navin Dissanayake had said that the banks involved were from Europe.
"We are trying to negotiate with the Americans and the Europeans on payment terms. The central bank is already having discussions with the stakeholders," Dissanayake emphasized. "There are a couple of German banks that were interested in helping us. I am very confident that it can be worked out very soon."
The official further added that India had already worked out a system for maintaining trade with Iran when the US re-imposes sanctions on Iran, stressing that Sri Lanka could also replicate or follow the same to export tea to Iran.
"Iran is buying a lot of our tea and we have a bilateral agreement with them. Just because the Americans put sanctions on them, it doesn't mean that they have to impose a sanction on us," Dissanayake said.
"Right now our tea is going to Iran, but the problem is with the payment terms," he added.
Official figures show that Sri Lanka exported 27.4 million kilograms of Ceylon tea to Iran in 2017. The figure was 19 percent lower than the year before.
Iran is the fourth largest market of Ceylon tea with a 9.5 percent share of total exports.