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Sri Lanka bows down before China agreeing to accept new stock of fertilizer

Sri Lanka has to bow down before China to avoid diplomatic row by agreeing to accept another fresh stock of organic fertilizer from the Chinese company, Qingdao Seawin Biotech Group Co after rejecting its first stock 20,000 metric tonnes of organic fertilizer over charges of containing harmful bacteria.

 The People’s Bank has paid USD 6.9 million to the China-based fertilizer company for the losses caused due to Sri Lanka rejecting two of its shipments.

The decision was taken after the Colombo Commercial High Court dissolved the enjoining order preventing the payment on Letter of Credit to Qingdao Seawin Biotech Group Co., Ltd.

On Monday (03), the enjoining order in question was dismissed as all parties had agreed for a settlement to ship a new stock of standardized fertilizer despite two previous shipments being rejected by Sri Lanka. 

Sri Lanka will be compelled to pay US$ 8.3 Million for the ship transporting rejected Chinese Fertilizer. This payment is to be included $6.75 Million as well as another $ 1.6 Million to the shipping company for delay charges.                                                                     

Agriculture Minister Mahindanda Alugthgamage defended the payment of 6.9 million US dollars to Qindao Seawin Biotech Group on January 09, saying the firm is expected to re-supply a rejected fertilizer shipment with a fresh one complying with domestic quarantine rules.

He said that the Chinese company had kept a $5 million bond. They have agreed to supply fertilizer under the correct standards.

The People’s Bank of Sri Lanka says it has paid USD 6.9 million to the China-based fertilizer company, Qingdao Seawin Biotech Group Co., Ltd for the losses caused due to Sri Lanka rejecting two of its shipments.

The decision was taken after the Colombo Commercial High Court dissolved the enjoining order preventing the payment on Letter of Credit to Qingdao Seawin Biotech Group Co., Ltd.

All arrangements have been made to import a fresh stock organic fertilizer from the same Chinese company by March this year to meet the Yala season fertilizer requirement, Chairman of Colombo Commercial Company Methsiri Wijegunawardena said.  

He added that the Chinese company has been requested to remanufacture the fertilizer to comply with the required standards of the Sri Lanka Standards Institute (SLSI). 

In September 2021, the Government suspended the importation of organic fertilizer from Qingdao Seawin Biotech Group Co., Ltd.

At that  time, Minister of Agriculture Mahindananda Aluthgamage said the decision had been taken after tests on samples of the fertilizer had identified harmful bacteria.

Following this, the Government also rejected a new consignment of the fertilizer that was en route from China, denying entry for the transporting vessel to Sri Lanka.

As a result, in October, the People’s Bank of Sri Lanka was blacklisted by the Economic and Commercial Office of the Chinese Embassy in Colombo.

The Embassy said the bank was blacklisted for failing to make the payment according to the Letter of Credit (LOC) and contracts between the two parties causing huge losses to Chinese companies in international trade in Sri Lanka.

It was the first consignment of Colombo’s plans to purchase 99,000 tonnes of organic fertilizer from Qingdao Seawin Bio-tech group, a Chinese company specializing in seaweed-based fertilizer, at a cost of $49.7m (£36m).

The issue was the stock fertilizer was the quality of the fertilizer – which scientists said, instead of helping, could prove harmful to crops.

The decision to suspend the fertilizer stock has triggered an angry rebuttal from Qingdao Seawin.

“The unscientific detection method and conclusion of National Plant Quarantine Service (NPQ) in Sri Lanka obviously do not comply with international animal and plant quarantine convention,” the company thundered in a statement.

As the controversy escalated, a court ordered the state-owned People’s Bank to stop payment of $9 million for the cargo already awaiting entry.

The Chinese embassy in Colombo responded by blacklisting the bank for not honoring the payment to the company

The Qingdao Seawin has also demanded eight million dollars’ compensation from the Sri Lankan National Plant Quarantine Service for the loss of reputation it has suffered following the controversy.

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