Proposal to Cabinet to pay for Chinese Fertilizer, ensuring no loss to both parties

COLOMBO (News 1st); Sri Lanka's Cabinet of Ministers was presented with a proposal to make the necessary payments for the rejected Chinese Organic Fertilizer, ensuring there is no loss to both parties.

The relevant cabinet paper was presented by Agriculture Minister Mahindananda Aluthgamage and Justice Minister Ali Sabry, PC.

These cabinet papers were tabled on the advice of the Attorney General.

A Senior Government Minister speaking to News 1st confirmed the cabinet paper was presented with regard to the payment of approximately USD 8 Million.

However, it is unclear as to how Sri Lanka would be making the payment ensuring there is no loss, given that the Chinese company had already sought for arbitration in Singapore, while Sri Lanka has also not accepted the product.

Arbitration:

China’s Qingdao Seawin Biotech Group Co., Ltd has sought compensation of 8 million US dollars over its organic fertilizer deal with Sri Lanka.

The compensation has been sought from Colombo Commercial Fertilizers Ltd. through an arbitration center in Singapore.

The Chinese company says that Sri Lanka violated the agreement with regard to the purchasing of the Chinese Organic Fertilizer.

The Bulk Carrier – Hippo Spirit:

The Hippo Spirit is carrying tonnes of rejected Chinese Fertilizer from Qingdao Seawin Biotech Group Co., Ltd to Sri Lanka.

Earlier, it was reported that the Hippo Spirit, the ship carrying Chinese Organic Fertilizer, did not return to China after the first samples were rejected by Sri Lanka.

Instead, the Hippo Spirit had sailed to Singapore and altered its course back to Sri Lanka, without returning to China.

On the 22nd of September, the Hippo Spirit ship carrying 20,000 metric tonnes of organic fertilizer left for Colombo from China’s Qingdao Port.

But the ship was diverted to Singapore after harmful bacteria was detected in the samples of this fertilizer shipment.

The Hippo Spirit ship that didn’t return to China had left Singapore declaring it would be heading to the Colombo Port.

Data available online showed the Hippo Spirit ship in Hambantota on the 24th of October 2021 under the name Seiyo Explorer.

The Hippo Spirit and the Seiyo Explorer both share the same IMO number, and therefore it can be confirmed the Hippo Spirit is the Seioy Explorer.

The IMO Ship Identification Number is a unique seven-digit number that remains unchanged through a vessel’s lifetime and is linked to its hull, regardless of any changes of names, flags, or owners.

After almost two months of sailing in Sri Lankan waters, the Hippo Spirit set sail for Singapore in early December.

Pathogen Detected:

On the 17th of September Sri Lanka’s Minister of Agriculture confirmed that a microorganism identified as ‘Erwinia’ was discovered in samples brought down ‘unofficially’ to Sri Lanka and tested.

The supplier was the same, Qingdao Seawin Biotech Group Co., Ltd.

On September 29th, Sri Lanka’s Agriculture Minister Mahindananda Aluthgamage announced the suspension of organic fertilizer imports from China.

This was after Director-General of Agriculture Dr. Ajantha De Silva on 28th September confirmed that Harmful Bacteria was detected in a fresh sample (2nd batch) of Chinese Organic Fertilizer.

The Ceylon Fertilizer Company Limited had got a court order to block payment to Qingdao Seawin Biotech over the shipment of organic fertilizer which was contaminated.

The Colombo Commerical High Court had issued the order on October 22nd, against the Qingdao Seawin Biotech, its local agent, and the People’s Bank.

Blacklisting People’s Bank :

The People’s Bank of Sri Lanka was then blacklisted by the Economic and Commercial Office of the Chinese Embassy in Sri Lanka for failing to make the payment according to the Letter of Credit and the contracts between the two parties.

However, People’s Bank said that is it bound by an enjoining order issued by the Commercial High Courts of Sri Lanka with regard to the trade transaction in question, which precludes the bank from processing the payment.

People’s Bank also said that the temporary delay in processing the said payment pertaining to the LC is solely due to the bank’s obligation to be bound by the legal directions of the country, as a responsible corporate citizen.

Letter of Demand:

On the 7th of November Qingdao Seawin Biotech Group Co., Ltd., the Chinese Organic Fertilizer Manufacturer sent a Letter of Demand to the National Plant Quarantine Service.

The Letter of Demand seen Exclusively by News 1st notes that Qingdao Seawin Biotech Group Co., Ltd., has suffered significant loss and damage in a sum of US$ 8 Million and continues to suffer further loss and damage due to loss of reputation and goodwill as well as existing and potential business, due to the negligent conduct of the National Plant Quarantine Service.

The LOD noted that the NPQS make a payment of US$ 8 Million within 3 days from the date hereof for the loss and damage caused to Qingdao Seawin Biotech Group Co., Ltd.