Sri Lanka seeks tea-for-oil barter deal with Iran - report

May 17, Colombo: Sri Lanka tea exporters hope the United States would agree to a mechanism to settle payments for oil imports from Iran with tea, according to a report by Press TV of Iran.

"We are very optimistic that the US would be intervening where Sri Lanka would be paid in US dollars for tea exports to Iran, where sanctions prevent the Iranian tea importers to transact business in dollars," said Rohan Fernando, the chairman of Sri Lanka's Tea Exporters Association, Press TV reported.

Fernando emphasized that it is difficult at present to regularize the tea trade with Iran due to the complications that the sanctions have created for conducting banking transactions.

Iranian banks, he said, are not allowed to deal with US dollars due to the sanctions. "They have to buy dollars from elsewhere to pay the Sri Lankan tea exporters," Fernando has been quoted as saying by Sri Laka's Ceylon Today newspaper.

Sri Lanka's media reported last week that that the US has agreed to find a solution for settling tea trade between Iran and Sri Lanka.

During discussions with the US Charge d'Affairs Andrew Mann and the Commercial Officer in Colombo, local authorities and Plantation Ministry officials highlighted concerns on how the industry was impacted due to their inability to obtain payments for tea exports through Iranian banks.

"In this respect, these matters were also raised during the US Secretary of State John Kerry's recent visit to Colombo when the visiting delegation stated that they would provide a solution," reported The Sunday Times of Sri Lanka.

Sri Lanka enjoyed 54 percent of the Iranian tea market share in 2012 with exports amounting to 38,000 million tons (MT) that year, the report added. This came down by 22 percent in volume to about 30,000 MT in 2014 mainly due to the delay in remittances as a result of which exports dropped. In 2013, tea exports to Iran were at 38,000 MT.

Iran is the second biggest market for Sri Lanka's tea exports that grabs 14 per cent of the total tea exports from this island nation. Iran buys the highest amount of teas from Colombo comprising 48 percent of its market share of the total 80,000 MT tea imports to Iran.