Sri Lanka is starting barter trade (goods for goods) with Iran from next month, under which it will buy Iranian oil in exchange for $250 million worth of tea.
This was told by a Sri Lankan official to a foreign news agency. He said that we are waiting for the final documents, hopefully the export will start from July.
Through the barter program, the Sri Lankan state-owned Ceylon Petroleum Company will buy oil from Iran and pay the country’s tea board in rupees, the tea board will send the money to Iran through tea exporters.
Tea importers in Iran will pay the National Iranian Oil Company in Rials.
Barter trade for imported oil was agreed in 2012 in 2021, but due to Sri Lanka’s extraordinary dollar shortage, implementation took longer.
Sri Lankan Tea Board Chairman Neeraj D’Mal said that this is the best time as we will have access to an important market and Iran and Sri Lanka will be able to trade without depending on the dollar.
He said that it was stipulated in the agreement that we will export tea leaves worth 5 million dollars per month for 48 months, but we have planned to export tea worth 2 million dollars for now.
It should be noted that Sri Lanka’s Ceylon tea is popular worldwide and is also the most foreign exchange earning crop for the country.
According to the official data, the exports of Ceylon tea last year were one and a half billion dollars.
Iran is a major buyer of tea from Sri Lanka, but imports from $12.8 million in 2018 dropped to $70 million last year due to US sanctions.
A major part of Sri Lankan tea reaches Iran through the United Arab Emirates.
On the other hand, UAE has also doubled its tea imports from Sri Lanka.
5 years ago, UAE’s tea imports from Sri Lanka were worth 48 million dollars, which has increased to 118 million dollars last year.
By the end of May this year, Sri Lanka’s foreign exchange reserves had reached 3.5 billion dollars, which is the highest amount in the last 14 months.
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