ECONOMYNEXT – Sri Lanka’s Agriculture Minister Mahindanda Alugthgamage defended the payment of 6.9 million US dollars to Qindao Seawin Biotech Group, saying the firm is expected to re-supply a rejected fertilizer shipment with a fresh one complying with domestic qurantine rules.
Sri Lanka’s state-run People’s Bank made the payment on an letter of credit it had issued after a court order barring the lender, was removed.
“There is nothing wrong in making the payment to China,” Minister Aluthgamage told reproters Saturday. “It was under the advice of the Attorney General that this was settled.
“That chinese company had kept a 5 million dollar bond. The have agreed to supply fertilizer under the correct standards.”
The first shipment was rejected by Sri Lanka’s plant quarantine office after finding the fertilzer contaminated with Erwinia bacteria which can harm crops.
The Chinese firm had insisted that pre-shipment inspection had found no problem and the requirement for domestic plant quarantine was not included in the original agreement. Banks are usually required to make payment of irrevocable letter of credit when goods land in a country as long as conditions set down in the document are not violated.
The fertilizer ship stayed for several weeks in Sri Lanka waters, as state-ferlizer firms which had ordered the organic fertilzier refused to take delivery, and Qindao Seawin Biotech also went for arbitration in Singapore over the non-payment.
Under Sri Lanka law however, organic materials have to go through plant quarantine.
“The ship will go back. They will make the correct fertilizer,” Aluthgamage said. “They will send samples, plant quarantine will test them and then the fertilzier ship will return.
“The only problem is the fertilizer is not coming at the right time. Taht is the loss, there is no financial loss.”
Many Sri Lanka farmers have refused to use organic fertilizer and those who used a complaining of yellowed leaves, stunted growth and low crops.
A government ban on chemical fertilizer has been lifted. Minister Aluthgamage said chemical fertilizer would be available in the next cropping season. (Colombo/Jan09/2021)