ECONOMYNEXT – Sri Lanka’s Agriculture Minister Mahindanda Alugthgamage defended the payment of US $ 6.9 million to the Qindao Seawin Biotech group, saying the company would have to resupply a rejected fertilizer shipment with a new cargo complying with national quarantine rules.
The People’s Bank of Sri Lanka made the payment on a letter of credit it issued after a court order banning the lender was withdrawn.
“There is nothing wrong with making the payment to China,” Minister Aluthgamage told the breeders on Saturday. “It was on the advice of the Attorney General that this was settled.
“This Chinese company had kept a deposit of 5 million dollars. They agreed to provide fertilizer to the correct standards.
The first shipment was rejected by the Sri Lanka Plant Quarantine Office after finding the fertilizer contaminated with Erwinia bacteria which can harm crops.
The Chinese company had insisted that the preshipment inspection did not reveal any problems and that the national plant quarantine requirement was not included in the original agreement. Banks are generally required to make payment for an irrevocable letter of credit when the goods land in a country as long as the conditions set out in the document are not breached.
The fertilizer vessel remained in Sri Lankan waters for several weeks as the state fertilizer companies that had ordered the organic fertilizer refused to take delivery, and Qindao Seawin Biotech also sought arbitration in Singapore for non-payment.
Under Sri Lankan law, however, organic material must go through plant quarantine.
“The ship will leave. They will make the right fertilizer, ”said Aluthgamage. “They will send samples, the quarantine of the plants will test them, then the fertilzier ship will come back.
“The only problem is that the fertilizer doesn’t arrive at the right time. It is loss, there is no financial loss.
Many Sri Lankan farmers have refused to use organic fertilizers, and those who have used them complain of yellowing leaves, stunted growth and poor harvests.
A government ban on chemical fertilizers has been lifted. Minister Aluthgamage said chemical fertilizers would be available during the next harvest season. (Colombo / Jan09 / 2021)