Thursday, April 25, 2024
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Sri Lanka coal deal with US sanctioned company creates serious consequences.

By: Staff Writer

March 25, Colombo (LNW): A Dubai based company which was awarded a contract to supply coal for the Lakwijaya Power Station in Sri Lanka is to face consequences of violating international best trading practices as result of the deal with a UAE based company sanctioned by US government

”According to information now in the public domain, a company called Black Sands Commodities FZ LLC based in the UAE was given the deal to supply 4.5 million tonnes of coal from Vanino Port, Russia. The Company is now counting the coal supply at a base rate of 295.22 US dollars and 33 dollars a tonne for freight

The deal was supposed to be for seasons 2022-2023, 2023-2024 and 2024-2025. Critics have said the price was too high

Black Sand Commodities FZ LLC, has been supplying coal to Lanka Coal Ltd., a state-owned enterprise of the Government of Sri Lanka.

The United States Government has placed Black Sand Commodities FZ LLC under sanctions enforced by the Office of Foreign Assets Control (OFAC), a move that carries significant legal and economic implications.

Despite these sanctions, trade between Lanka Coal Ltd. and Black Sand Commodities FZ LLC has continued.

This ongoing engagement not only breaches international sanctions but also risks exposing the Government of Sri Lanka to potential global disrepute.

The situation has escalated with two vessels from Black Sand currently detained at the Colombo port, and an additional six vessels are end route, highlighting the immediacy and seriousness of the violation.

In an attempt to circumvent the sanctions, there are reports that Black Sand Commodities FZ LLC is seeking to transfer its contractual obligations to another entity, Potencia FZ LLC.

Such maneuvers, if realized, would represent a deliberate effort to bypass international legal frameworks, further complicating the situation for all parties involved.

This unfolding scenario raises several concerns, notably the potential for global disrepute and the possible implications for the Sri Lankan government, given its ownership of Lanka Coal Ltd.

The continuation of these trades under the shadow of sanctions poses a complex challenge that could affect Sri Lanka’s diplomatic relations and its standing in the international community.

Furthermore, the involvement of financial institutions in these transactions introduces an additional layer of risk.

Banks facilitating these trades face the threat of sanctions, which could have far-reaching consequences not only for the institutions themselves but also for their customers, potentially jeopardizing the financial stability of countless depositors.

The situation underscores the intricate web of international regulations and the critical importance of adherence to global sanctions.

It serves as a reminder of the far-reaching consequences that can arise from violations, affecting not just the immediate parties involved but potentially impacting the broader economic and diplomatic relations of a nation.

As this situation evolves, it highlights the need for rigorous compliance with international sanctions and the importance of maintaining transparent and lawful international trade practices.

The resolution of this issue will be closely watched by both local and international observers, as it carries significant implications for Sri Lanka’s international relations and economic stability.

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