Iranian tea deal at a standstill

Sri Lanka is still working out the draft agreement to be signed with Iran that would enable the country to trade tea for oil but unlikely to ready before the Presidential election. Iran has been subjected to sanctions by the US.

The draft agreement had been worked out and sent to the Foreign Ministry and Attorney General’s Department for necessary approvals, Sri Lanka Tea Board (SLTB) Chairman Lucille Wijewardena said. The agreement would ensure that Sri Lanka would be allowed to settle its oil payments in turn for tea exports for a maximum of US$5 million per month, he said.

A delegation from Iran was in the country recently to engage in talks on a number of concerns including the maximum limit of US$5 million per month.

Following the delegation’s return to Iran and subsequent discussion with authorities there, a Memorandum of the Minutes of the discussion had been sent to Sri Lanka, Mr. Wijewardena said.

He pointed out that the Iranian officials have now agreed to the US$ 5 million limit worth of tea exports to be made per month.

However, the delays were now said to be purely due to bureaucratic procedures that need to be followed in gaining the required approvals prior to implementation. Further, it was pointed out that should there be any changes made by the Ministry or the department it would then have to be submitted to the Cabinet for further approval as well.

The Ceylon Petroleum Corporation’s ( CPC) debts would be settled through this agreement 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.

In 2018 Sri Lanka sold 23,914 MT of tea to Iran and in the previous year it was much higher at 27,418 MT. Iran is among the top five markets that purchases teas from Sri Lanka. The other key markets are Iraq, Turkey and Russia.