Sri Lanka’s tea for oil barter trade with Iran to take a hit due to crisis

Colombo, June 27 (Daily Mirror) - Sri Lanka’s barter trade with Iran (tea for oil) to settle dues for a previous transaction is likely to be hit by tension in the Middle-East at the moment, a Minister said.

Sri Lanka started bartering tea to Iran in 2023 in lieu of $250 million owed for oil.

The barter was agreed in 2021 for oil imported in 2012, but the exchange was delayed after Sri Lanka's unprecedented dollar shortage last year plunged the economy into its worst financial crisis in more than seven decades.

The agreement was to send $5 million worth of tea each month for 48 months. Under the barter programme, state-run Ceylon Petroleum Corp that bought the oil will give rupees to the Tea Board to ship tea via Sri Lankan exporters. Iranian tea importers will then pay rials to the National Iranian Oil Company.

Asked about the current status, Plantation and Community Infrastructure Development Minister Samantha Vidyaratne said Sri Lanka has to settle $ 145 million more. He said a cabinet subcommittee had been appointed and its first meeting conducted to explore alternatives to secure tea exports if the Middle-East crisis prolongs. He said Iran, alone, accounts for more than three percent of Sri Lanka’s total tea exports.

However, the Minister sounded optimistic that tension would ease off since the current truce between warring parties is being held at the moment.