The People’s Bank has decided to pay USD 6.9 million to the Chinese company that shipped a much-disputed consignment of organic fertilizer to Sri Lanka.

The decision was taken after the Colombo Commercial High Court dissolved the enjoining order preventing the payment on Letter of Credit to China-based Qingdao Seawin Biotech Group Co., Ltd.

On January 03, the enjoining order in question was dismissed as all parties had agreed for a settlement to ship a new stock of standardized fertilizer although the controversial organic fertilizer shipment was not accepted by the island nation.

As per reports, the People’s Bank is expected to make the payment to the Chinese fertilizer firm later today.

Last year, the Ceylon Fertilizer Company (CFC) had secured two enjoining orders from the Colombo Commercial High Court against Seawin Biotech, its local agent and the state-run People’s Bank, preventing the payment on Letter of Credit. 

The first court order against the Chinese firm in question was secured on October 23, blocking the People’s Bank from making any payment under a Letter of Credit opened in favour of the Chinese company.

During a previous court proceeding, Additional Solicitor General Susantha Balapatabendi, who appeared on behalf of the CFC, told the judge bench that the Seawin Biotech had shipped a fertilizer consignment, which is a partial shipment worth more than a billion rupees that was procured through a tender process initiated by the Agriculture Ministry.

Although the said Chinese firm was required to ship sterile organic fertilizer under the tender contract, it had admitted in its shipping advice that the consignment may contain microorganisms, he had further told the court.

The National Plant Quarantine Services (NPQS), which tested the sample sent to them, had confirmed the presence of organisms, including certain types of harmful bacteria, the Additional Solicitor General had said, adding that, in this context, the Chinese firm in question had failed to complete the accepted terms of the tender.

As per the terms of the contracts, the payment for the controversial organic fertilizer shipment was slated to be made through a Letter of Credit established via the People’s Bank.

However, on December 14, the Sri Lankan government said it has decided to pay USD 6.7 million to the Chinese fertilizer company, on the advice of the Attorney General’s Department.

According to Agriculture Minister Mahindananda Aluthgamage, the payment includes the cash deposit of USD 5 million placed by the company.