Sri Lanka plans US$ 250mn tea deal with Iran

Sri Lanka is negotiating a US$ 250 million barter deal to restart Iranian tea exports and settle a legacy 2012 oil loan that was blocked due to U.S. sanctions imposed in 2016, ministers said. The state-run Ceylon Petroleum Corporation in Sri Lanka was unable to resolve a $250 million loan, and the country also lost its tea market in Iran amid U.S. sanctions, Plantation Minister Navin Dissanayake said.

Sri Lanka's state-run Ceylon Petroleum Corporation will pay $5 million equivalent a month to Ceylon Tea Board for 50 months, said Petroleum Minister Kabir Hashim, the state industry regulator. Based on the current exchange rates, the Tea Board will then pay exporters who ship tea to Iran. Importers in Iran must pay the petroleum business in Iranian currency until the $250 million loans have been resolved.

Sri Lanka's ministerial cabinet had cleared the agreement on Hashim and Dissanayake's joint offer. Dissanayake said yesterday, after the cabinet approval, that he had met the U.S. ambassador and was sure that Iran would not object.

Revenue from tea exports in Sri Lanka has reportedly increased by Rs. 7.6 billion in the first seven months of 2019, reaching Rs. 141.4 billion, compared to Rs. 133.8 billion earned during the same period in 2018, as recently quoted by tea brokers.

OSL Take: Sri Lanka’s tea sector has been recording continuous growth with increased recordings in the exports sector as well. The proposed bilateral trade agreement will provide a further boost to Ceylon Tea.

The government of Sri Lanka has also offered many incentives to promote the country’s tea industry. Foreign businesses/investors could explore business/investmentopportunities in Sri Lanka’s tea industry.
VBS/AT/20191101/Z_TB1