Sri Lanka completes four instalments of tea-for-oil deal with Iran

Saturday, 16 March 2024 00:09 - - {{hitsCtrl.values.hits}}

Decides to increase instalment amount from $ 5 - $ 10 m

Sri Lanka has recently successfully completed the fourth instalments of the tea-for-oil deal with Iran, a significant milestone achieved since the agreement was reached in 2021.

Under the arrangement, the Ceylon Petroleum Corporation (CPC) settled a longstanding payment liability of $ 250 million owed to Iran for oil purchased in 2012. As a possible settlement amidst US-led sanctions, Iran agreed to offset payment for crude oil against tea imports from Sri Lanka.

“CPC had to pay around $ 250 million to Iran for oil, which remained unpaid for the past decade. Beginning last year, we initiated payments in monthly instalments of $ 5 million each, and we have completed four instalments to date. Recently, a decision was made to double the monthly instalment from $ 5 million to $ 10 million, further enhancing the benefits for the tea industry,” Power and Energy Minister Kanchana Wijesekera said.

So far $ 20 million worth tea has been exported to Iran under the tea-for-oil barter trade agreement.

“This initiative directly supports our tea industry, as payments are channelled through the Sri Lanka Tea Board, which exports tea equivalent to the payment value,” he said.

The Minister said the milestone was made possible through the y of funds generated by the CPC, including the 4% dividends accumulated through the Government introduced pricing formula for fuel.

Wijesekera commended the CPC management for effectively managing profits and dividends to settle all outstanding payments to suppliers and banks, ensuring financial stability and integrity in transactions.