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Sri Lanka and Iran have set the tea for oil deal in motion with the first payment made in August and tea shipments scheduled for early September.
Sri Lanka and Iran have been in talks to engage in a tea-for-oil deal whereby Sri Lankan tea exporters will sell their teas to Iran and the payment of which will be made by the Ceylon Petroleum Corporation (CPC) as its debts to Iran (for oil purchases) are deducted accordingly.
The monthly payments from the CPC are to be made to the Sri Lanka Tea Board (SLTB) to the value of US$5 million in rupee equivalent. This first tranche was made in August from the CPC to the SLTB, the Tea Board Chairman Niraj De Mel told the Business Times on Thursday.
He noted that of the 80 exporters on the list of exporters to Iran about six of them will be exporting the first consignment of teas under this agreement by early September.
Mr. De Mel pointed out that the Iranian type tea prices initially picked up and then faced a severe decline due to the strengthening of the rupee. But with winter buying the second half of this year is looking positive for Sri Lanka, he noted.
Teas will be exported in stocks of 60 per cent, 25 per cent and 15 per cent based on the size of the exporter, it was stated.
With this agreement going ahead it is expected that Sri Lanka should close this year’s total exports at approximately 265 million kg, Mr. De Mel said.
The agreement is valid for a period of four years or 48 months and at the amount of $5 million per month.
Meanwhile Sri Lanka’s tea production for the month of July this year totalled 21.37 million kg indicating an increase of 1.45 million kg compared to the same period last year. In 2022 July tea production was at 19.92 million kg.
All elevations, according to Forbes and Walkers Tea Brokers, had shown an increase in comparison to the corresponding period of 2022.
However, the July 2023 figures showed a decreased of 5.01 million kg compared to the same period in July 2021 when production reached 26.38 million kg.
Source: www.sundaytimes.lk/230820/business-times/tea-for-oil-deal-with-iran-gets-going-528270.html
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