For years, a quiet arrangement between Sri Lanka and Iran kept fuel moving into the island while tea moved out.
No hard currency changed hands and no banks needed to get involved. That arrangement has now been paused.
Sri Lanka’s Tea Board has confirmed that the tea-for-oil barter mechanism with Iran has been suspended.
The reason, according to Tea Board Chairman Rajpal Obeyesekere, is straightforward as the debt is nearly paid off.
The scheme was designed to repay roughly USD 250 million that the Ceylon Petroleum Corporation (CPC) owed Iran for fuel imports.
Under the arrangement, Iranian oil had kept Sri Lanka running during the worst of its economic crisis.
In return, Sri Lanka would ship tea and the Tea Board would collect rupees from the CPC and pass them on to local exporters.
Iranian importers would settle their side of the deal in rials with the National Iranian Oil Company. No dollars needed to cross borders.
By the time the Tea Board sat down to compile its figures around six weeks ago, tea worth approximately USD 244 million had already made its way to Iran.
With the USD 250 million ceiling in sight, officials decided to stop further shipments until they could account for consignments still in transit.
The timing raised questions. The Middle East has seen a significant escalation in tensions in recent months, and the suspension coincided broadly with that period.
Obeyesekere was firm in stressing that the pause had been decided before the latest regional crisis and was driven entirely by financial and operational considerations rather than geopolitical ones.
The stakes were practical, as any shipments beyond the agreed limit would not be covered by the petroleum corporation, leaving exporters unpaid for goods already dispatched.
Iran remains a meaningful market for Sri Lankan tea.
The country drinks around 100,000 metric tonnes of tea each year but grows only a fraction of what it needs, importing between 60,000 and 70,000 metric tonnes annually from suppliers that include Sri Lanka.
Source- The Leadar
