The People’s Bank today (January 7) paid $ 6.9 million to the Chinese company that shipped a hotly contested batch of organic fertilizers to Sri Lanka.
The payment came after the Colombo High Commercial Court dissolved the restraining order preventing payment of the letter of credit to Chinese company Qingdao Seawin Biotech Group Co., Ltd.
On January 3, the injunction order in question was dismissed as all parties had agreed to a settlement to ship a new stock of standardized fertilizer.
Under the terms of the contracts between Sri Lanka and the Chinese company, payment for the controversial shipment of organic fertilizers was to be made through a letter of credit issued through the People’s Bank.
However, last year the Ceylon Fertilizer Company (CFC) obtained two injunctions from the Colombo High Commercial Court against Seawin Biotech, its local agent and the State People’s Bank, preventing payment of the letter of credit.
The first court ruling against the Chinese company in question was obtained on October 23, preventing the People’s Bank from making any payments under an open letter of credit in favor of the Chinese company.
The fertilizer shipment in question was in the spotlight in recent months after the National Plant Quarantine Services (NPQS), which tested the fertilizer samples sent by Qingdao Seawin Biotech, revealed the detection of the microorganism called “Erwinia” in September 2021.
A few days later, Sri Lanka decided to suspend the import of organic fertilizer from Seawin Biotech.
The Chinese company retaliated, claiming that the NPQS only took three days to reach a suspicious conclusion, although it took more than 6 days to identify Erwinia under rule ISPM27 of the IPPC (International Convention for the plant protection).
The “unscientific detection method and NPQ’s conclusion in Sri Lanka” does not comply with the international convention on animal and plant quarantine, added Seawin Biotech and urged the Swiss group SGS, a leading third-party testing organization. , to test again if the samples contain Erwinia.
However, the agriculture minister later insisted that the vessel carrying the cargo of fertilizers containing harmful bacteria would not be allowed to enter Sri Lanka, nor tested again.
The Chinese company then sent a demand letter asking for $ 8 million in damages from the additional director of Sri Lanka’s National Plant Quarantine Services (NPQS).