The Government has decided to back down in the dispute over the Chinese organic fertiliser shipment that was found to be contaminated.
Preparations are underway to resolve the dispute by paying 75 percent of the claim by the Chinese company. This amounts to US$ 6.7 million.
The Government has also decided to buy fresh stocks from the same company, Agriculture Minister Mahindananda Aluthgamage told the Sunday Times.
“We cannot afford to damage diplomatic relations over this issue,” the minister said.
He said that at present the dispute was that while Sri Lanka maintained that the shipment had arrived without a valid permit, the Chinese company insisted that since the Letter of Credit was opened the ship had arrived in the country.
According to minister, the Chinese company has agreed to take the shipment back and provide new stocks after proper checks on the samples. “If the talks are successful, we are willing to share 50 percent of the charges of the next shipment.”
He said that Attorney General’s advice had been sought in resolving the dispute which had continued for more than a month.
He said the order for the purchase had been made at the price of US$ 446 a metric tonne and the prices had now increased to more than US$ 900 and, therefore, the cancellation of the agreement would be more costly.
The minister said the proposed settlement would be submitted to the Cabinet for approval.