Chinese Fertilizer: Qingdao takes back US $ 5 Mn bond

COLOMBO (News 1st); Qingdao Seawin Biotech Group Co Ltd, the Chinese Fertilizer company that was at the center of an Organic Fertilizer shipment controversy has taken back the bond worth $5 million deposited by the company in Sri Lanka, via an order obtained from a Chinese Court.

The Sri Lanka government recently paid $6.9 million in compensation to the Chinese firm for forcing the shipment to be taken back to China.

In early August, Qingdao Seawin Biotech Group Co., Ltd. sent a letter to Sri Lanka's Ministry of Agriculture expecting a reply within 5 days stating that the latter has not made it clear if the project will be continued or discontinued, and thus the project had resulted in losses of USD 8 Million to Qingdao Seawin Biotech, and the losses are still expanding.

The Sri Lankan government completely banned chemical fertilizers when it unveiled a new agricultural policy in April 2021.

Thereafter, to address the fertilizer crisis the then-Sri Lankan Government decided to import Organic Fertilizers produced using seaweed from China's Qingdao Seawin Biotech Group Co.,Ltd.

However, tests by the National Plant Quarantine Service revealed that the fertilizer was contaminated with a plant pathogenic bacterium.

Sri Lankan authorities disregarded these test results and decided to call for a new test and decided to open the necessary Letters of Credit or LCs to import fertilizer from China's Qingdao Seawin Biotech Group Co.,Ltd.

The fertilizer shipment aboard the Hippo Spirit set sail from China on the 23rd of September 2021 immediately after the LCs were opened, and the Government of Sri Lanka announced that it suspended the order while the vessel was en-route to the island.

However, the Chinese Company demanded compensation from Sri Lanka for losses and damages to its reputation, as LCs were already opened for the shipment.

In the end, Sri Lanka was forced to pay US $ 6.9 Million to China's Qingdao Seawin Biotech Group Co.,Ltd. to settle the dispute.

Mahinda Amaraweera, Sri Lanka's Agriculture Minister admitted that Sri Lanka suffered a loss following these events, adding that he explored the possibility of reclaiming the US $  6.9 Mn paid to Qingdao Seawin Biotech Group Co.,Ltd. or obtaining chemical fertilizer to allow for the paid amount. However, the Company had turned down both requests. 

"We are facing a situation where we have no money and no fertilizer. We cannot solve this, since there is a legal matter pending as well. I held talks with the Sri Lanka Standards Institute on the payment because I wanted to recover the money. It proved to be futile. We must admit that Sri Lanka suffered a loss," he said.

Rohana Pushpakumara, Sri Lanka's Agriculture Secretary revealed that Qingdao Seawin Biotech Group Co.,Ltd. had filed an ex parte case in a Chinese court, and as per the court ruling they have taken back the US $ 5 Million deposit.

On the 8th of August 2022, Qingdao Seawin Biotech Group Co., Ltd. sent a letter to Sri Lanka's Ministry of Agriculture expecting a reply within 5 days stating that the latter has not made it clear if the project will be continued or discontinued, and thus the project had resulted in losses of USD 8 Million to Qingdao Seawin Biotech, and the losses are still expanding.

Rohana Pushpakumara, the Agriculture Secretary dismissed the imposition of a deadline adding that Qingdao Seawin Biotech Group Co.,Ltd. too must follow the terms of mediation.

"There is an agreement to obtain non-organic Nitrogen-based fertilizer from the fertilizer company,"
he told reporters.

When Former President Gotabaya Rajapaksa decided to ban the imports of Chemical fertilizers, the sitting Agriculture Secretary was also the Agriculture Secretary at that time.

According to him, the policy was changed without consulting the Agriculture Ministry of the Department of Agriculture. 

"We tried to postpone the decision on moving towards organic fertilizer by another two years. We failed. Therefore I resigned," he said.

Ever since Sri Lanka decided to completely ban chemical fertilizer imports it has seen five Agriculture Secretaries come and go.

The result was that Sri Lanka lost US $ 6.9 Million or Rs. 2.4 Billion.

It must be noted that the money set aside by the Sri Lankan Government to procure the Yala Season harvest from farmers is Rs. 2 Billion.

If Sri Lanka did not have to make the payment for the Chinese Fertilizer shipment, it could have used this money to purchase the Yala Season Harvest.