Chinese Fertilizer: Attorney General advises on recovering losses

Sri Lanka’s Minister of Agriculture Mahinda Amaraweera said the country’s Attorney General has advised on recovering the losses from the Organic Fertilizer procurement.

In November 2021, the Sri Lankan government  rejected a consignment of organic fertilizer from China’s Qingdao Seawin Biotech Group Co Ltd, citing quality issues—a claim the firm disputed and demanded third-party tests.

Thereafter, the Government paid USD 6.9 Million to the Chinese Fertilizer company.

The Minister said that a committee led by the Agriculture Secretary was appointed to explore the possibility in recovering the losses incurred from the controversial fertilizer transaction.

“We tried to recover the USD 6.9 Million that spent on the fertilizer order. We also tried to replace it with an organic fertilizer order. But, both attempts have failed,” he added.

In late August 2022, Qingdao Seawin Biotech Group Co Ltd, the Chinese Fertilizer company that was at the center of an Organic Fertilizer shipment controversy denied reports that it took back the Performance Bond back according to the ruling of the Chinese court.

The Chinese company said that the Performance Bond is automatically invalid after expiration, because the relevant parties of Sri Lanka fail to fulfill the commitment of L/C renewal, resulting in the expiry of L/C.

On the 25th of August 2022, 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.

It noted that related parties in Sri Lanka filed a lawsuit in the Sri Lankan Commercial High court in October 2021, and the subsequent lawsuit filed by Qingdao Seawin Biotech Group Co Ltd in China was a counter measure against the Sri Lankan lawsuit.

The statement said that after both parties reached a settlement in the Sri Lankan Commercial High court, Qingdao Seawin Biotech Group Co Ltd also withdrew the lawsuit in China.

It also added that according to the supplementary agreement reached between our companyand Sri Lankan side in February 2022, both sides shall continue to perform the organic fertilizer project.

It said unfortunately, up to now, Qingdao Seawin Biotech Group Co Ltd has not received any substantial response or positive action from Sri Lankan related parties.

The project has caused great losses to Qingdao Seawin Biotech Group Co Ltd and the long time inaction of Sri Lankan related parties has led to the lack of fertilizer in agriculture, and also damaged the interests of Sri Lankan farmers;

Qingdao Seawin Biotech Group Co Ltd rejected the proposal of providing chemical fertilizer instead of organic fertilizer put forward by the relevant parties of Sri Lanka on the following grounds:

(1) the bidding project and the subject matter agreed in the contract are organic fertilizers instead of chemical fertilizers, and we are not obliged to provide chemical fertilizers;

(2) Our company is a professional manufacturer of organic fertilizers and seaweed fertilizers, not a chemical fertilizers manufacturer, and does not have the conditions to produce chemical fertilizers;

(3) According to China’s current export policy, chemical fertilizers cannot be exported.

According to the introduction of relevant parties in Sri Lanka, one of the main reasons for its failure to complete the import of organic fertilizer is that the domestic organic fertilizer standard does not match the standard agreed in the contract.

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