TEHRAN- Iran and Sri Lanka signed a memorandum of understanding (MOU) based on which Sri Lanka will settle $251 million in oil import dues owed to Iran by bartering tea.

The agreement was inked by Head of Iran’s Trade Promotion Organization (TPO) Alireza Peyman Pak and Sri Lanka Minister of Plantation Ramesh Pathirana in Colombo on Tuesday, TPO portal published.

Announcing the finalization of an agreement for the release of Iran's delayed claim in Sri Lanka, TPO head said, “Nine years ago, about $250 million of Iranian oil exports to Sri Lanka was blocked and the possibility of payment did not exist. Fortunately, in the recent negotiations, we reached an agreement to return this money and its profit to Iran in the form of goods such as tea.”

“During the Iranian delegation's visit to Sri Lanka, fortunately, very good talks were held with representatives of the government and the private sector, and the two sides stressed the need to expand economic cooperation. During this meeting, we met with minister of plantation, officials of Trade Development Council, and head of Chamber of Commerce of Sri Lanka, and the outcome of all negotiations will be positive”, the official underlined.

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

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

The proposed scheme is to seek the possibilities of operationalizing a mechanism to settle the long outstanding debt of $250,925,169 to the National Iranian Oil Company (NIOC) by Ceylon Petroleum Corporation (CPC) through increasing the export of Ceylon Tea, the Ceylon Today reported.

Meanwhile, during the TPO head’s meeting with Sri Lankan minister of plantation and the head of Chamber of Commerce of Sri Lanka, the two sides emphasized establishment of a joint chamber of commerce, establishing Iranian production units in the field of dairy and food industries in Sri Lanka with the aim of re-exporting to countries without tariffs, exporting tractors and Iranian petrochemical products to Sri Lanka in order to develop trade relations between the two countries.

During this visit, Peyman Pak, while explaining the industrial capacities of the country and the measures taken to develop Iran's trade interactions with the countries of the region, introduced Iran's achievements in the field of medical equipment, medicine and knowledge-based products.

He also considered the establishment of direct relations between Iranian and Sri Lankan businessmen as the best way to develop trade relations between the two countries and suggested the establishment of a joint Iran-Sri Lanka Chamber of Commerce.

The Sri Lankan minister for his part referred to Iran's admirable achievements in various fields of industry, mining and knowledge-based products, and expressed his country's full readiness and welcome to import knowledge-based products, establish assembly lines for Iranian products and cooperate with the Iranian side in exploration and production of minerals.

MA/MA

Photo: TPO Head Alireza Peyman Pak (L) and Sri Lankan Minister of Plantation Ramesh Pathirana