Saturday, September 30, 2023

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Iran’s Foreign Minister to visit Sri Lanka  strengthening bilateral ties  

The Islamic Republic of Iran is ready to prepare the groundwork for providing Sri Lanka with technical-engineering services in all fields, especially energy.

Iran-Sri Lanka ties have always been friendly and close and today, with regard to the lift of sanctions, there are very good opportunities for developing relations between the two countries that can be taken advantage of to benefit the existing ties, foreign ministry sources said. 

The banking relations between the two countries are to be further developed to establish a solid base for cementing economic and commercial ties.

In this current backdrop Iran’s Foreign Minister Hossein Amir-Abdollahian is to visit Sri Lanka next week for crucial talks, a senior foreign ministry official said.

According to reports, he is scheduled to arrive in Sri Lanka on Tuesday following a visit to India on Sunday.

The Iranian Foreign Minister’s visit to Colombo comes a month after Iran agreed to accept tea from Sri Lanka to settle outstanding payments for oil purchased from Iran.

The Ministry of Plantation of Sri Lanka and the Ministry of Industries, Mines and Trade of the Islamic Republic of Iran agreed last month to formulate a scheme for the settlement of dues to be settled following US sanctions on that country

A sum of US$ 250.92 million outstanding from the Ceylon Petroleum Corporation to the National Iranian Oil Company by means of utilizing the said sum to facilitate the export of Ceylon Tea to Iran by signing a memorandum of understanding (MoU).

The MoU is a form of mutual commitment in complimenting each other`s duties and function in the Formulation of a Scheme for the Settlement of Sri Lanka’s Oil Outstanding to the Islamic Republic of Iran through the Exportation of Ceylon Tea.

Iran is among the top 10 importing countries of Ceylon Tea for the past several decades. 

Ceylon Tea which had a market share of around 47% in 2016 dropped to around 25% in 2020 due to the economic sanctions resulting in banking restrictions, payment problems and depreciation of Iranian Riyal. 

From a peak of 38.42Mn Kgs in 2013, tea exports from Sri Lanka to Iran dropped to 14.73Mn Kgs in 2020.

Due to US sanctions imposed on Iran in November 2012 and with the absence of an accepted payment mechanism through the banking system, Sri Lanka tea exporters found it difficult to receive the export proceeds from Iranian buyers

Sri Lanka was bracing for the fallout from the tensions in the Middle East after the US and Iran launched what some termed a shadow war. 

9 million kilograms of Ceylon Tea worth $ 129 million in 2018.Sri Lanka and Iran were also in talks over a tea for fuel repayment barter deal.

Once finalised, the deal was to see Sri Lankan export tea repay liabilities valued at approximately $ 240 million for oil imports from Iran..

Just recently, Iran had called for improved bilateral relations with Sri Lanka, including defence ties.

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