Tea-for-oil deal with Iran to be sealed

Sri Lanka will be going ahead with the tea- for- oil deal with Iran and is currently preparing to sign the agreements required between the Ceylon Petroleum Corporation (CPC) and the Sri Lanka Tea Board (SLTB) in this regard.

The CPC is due to sign the agreement with the SLTB to ensure that payments for oil from Iran will be made through sales of tea, although no date has been fixed as yet (to sign the agreement), Tea Board Chairman Jayampathy Molligoda said on Tuesday. Iranian authorities were in discussion with the Sri Lankan government recently in this regard.

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.

Talks had been held to carry out tea- for- oil trade with Iran over the past few years following the US sanctions but signing of this agreement was delayed due to the CPC dragging its feet on the matter, it is learnt.

Sri Lanka was even in 2019 working out the draft agreement to be signed with Iran that would enable the country to trade tea for oil as this is one of the key markets for Ceylon Tea.

The draft agreement had been already worked out and approved by the Foreign Ministry and Attorney General’s Department.

Meanwhile, tea prices are likely to continue to go down further since last week following the price correction on the recent quick surge in prices.

In the meantime, tea production is said to have increased and as the summer season is here the demand is likely to drop and so will the prices, Tea Exporters Association ( TEA) Chairman Sanjaya Herath told the Business Times on Tuesday.

He noted that this trend is likely to continue for the next few weeks and as a result the prices will drop as well.

Brokers note that the erratic weather pattern and the depreciation of currencies in crucial markets like Russia and Iran have given rise to a volatile situation. (SD)