Sri Lanka to sign tea for oil deal with Iran

Sri Lanka is on Tuesday inking a contra deal to sell Ceylon Tea in return for the oil purchases made by the Ceylon Petroleum Corporation (CPC).

Sources told the Times Online that an Iranian delegation in the country at present will be signing the tea for oil deal with the Sri Lanka Tea Board later on Tuesday.

Iran and Sri Lanka finalised the text on an MOU to carry out sale of Ceylon Tea in exchange for deducting the debt on fuel imports purchased nearly eight years back.

Sri Lanka purchased US$250 million worth of fuel about eight years back and this amount will be settled by sending tea stocks to Iran and the Sri Lankan government will pay the money to the local exporter. The MOU is likely to be signed in about two months’ time.

According to the agreement worked out at that time it was decided that about $5 million worth of tea stocks will be sent monthly to Iran that will cover the debt owed to for oil purchases made by Sri Lanka in the past.

This MOU is expected to settle Sri Lanka's long outstanding debt and particularly a win-win situation for Sri Lanka.

Signing of this MOU had been delayed due to the Presidential elections in 2019 and later the pandemic.

Sri Lanka has been unable to carry out direct trading with Iran following the US sanctions imposed on Iran and as a result had been negotiating to settle its debts in oil for tea exports that were hit as a result of these issues.