ECONOMYNEXT – Sri Lanka is planning a 250 million US dollar barter deal to revive tea export to Iran and settle a legacy oil credit dating back to 2012, which were blocked due to US sanctions imposed in 2016, ministers said.

Sri Lanka’s state-run Ceylon Petroleum Corporation was unable to settle a 250 million US dollar credit and the country also lost its market for tea in Iran after US sanctions, Plantations Minister Navin Dissanyake said.

Sri Lanka’s state-run Ceylon Petroleum Corporation will pay 5 million US dollars equivalent a month for 50 months to Ceylon Tea Board, the state industry regulator, Petroleum Minister Kabir Hashim said.

The Tea Board will then pay exporters who ship tea to Iran based on the current exchange rates.

The importers in Iran will pay in Iranian currency to the petroleum company until the 250 million US dol;ar loan is settled.

"We are not breaking US sanctions," Dissanayake said, "Food exports are not under sanctions, but because we cannot clear dollar transactions under sanctions we could not export to Iran.

Dissnayake said he had met with the US ambassador in Colombo three times over the issue.

Sri Lanka’s cabinet of ministers had cleared the deal on a joint proposal submitted by Hashim and Dissanayake.

Dissanayake said he had met the US ambassador yesterday after the cabinet clearance and was confident that there would be no objections from Iran.

An Iranian team is expected in Sri Lanka shortly for talks to resume tea exports.