Senior Government officials are not confident that they can recover the $ 6.9 million which the former Government had paid to settle a controversial organic fertiliser purchase from a Chinese company in 2021, The Sunday Morning reliably learns.
This, as highly-placed sources point out that the Chinese fertiliser manufacturer continues to refuse Sri Lanka’s request, in a move to protect the company’s trade reputation.
It is learnt that the Chinese manufacturer had refused Sri Lanka’s request to recover the $ 6.9 million during several rounds of recent discussions and instead had proposed to provide organic fertiliser for the same value. However, it is also learnt that the Sri Lankan officials are still trying to negotiate the matter.
Meanwhile, the Sri Lankan officials have also requested the Chinese manufacturers to provide chemical fertiliser instead of organic fertiliser, a request the company has also rejected, claiming that it was only manufacturing organic fertiliser.
In spite of the undesirable outcomes received by the Sri Lankan side, negotiations are still continuing.
When contacted by The Sunday Morning, Agriculture Minister Mahinda Amaraweera said the matter was being handled solely by the Foreign Ministry in order to avoid any possible damage that could be caused to the relationship between the two countries.
“I have submitted a Cabinet paper but the Cabinet decided to hand over the matter to the Foreign Ministry. It has now appointed a committee and Agriculture Ministry officials are providing the necessary information and support to the committee,” he said, declining to comment further on the matter.
In November 2021, the Sri Lankan Government rejected a consignment of organic fertiliser from China’s Qingdao Seawin Biotech Group Co. Ltd. citing quality issues – a claim the firm disputed, demanding third-party tests. Thereafter, the Government paid $ 6.9 million to the Chinese fertiliser company.
Last year, the Attorney General advised to recover the losses from the organic chemical fertiliser procurement.
The shipment was rejected by Sri Lanka while en route to the island following claims of quality issues. Sri Lanka’s National Plant Quarantine Service (NPQS) had claimed that samples of the fertiliser contained harmful bacteria, prompting the Chinese company to demand $ 8 million from the agency in early November.
The Chinese company subsequently sought arbitration in Singapore, and Sri Lanka later decided to settle the matter by paying $ 6.9 million to the fertiliser company, on terms purportedly agreeable to both parties.
Sri Lanka’s State-run People’s Bank made the payment on a Letter of Credit (LC) it had issued after a court order barring the lender was removed.
Attempts to contact the Ministry of Foreign Affairs regarding the stalemate in the negotiations failed.