Govt. negligence costs Sri Lanka $6.9Mn in unrecovered compensation: Report

Controversial fertilizer deal during GR’s time

• SL now in a precarious position, unable to recover loss
• Agriculture Ministry, State Ministry, state fertilizer companies held responsible for dereliction of duty

By Kelum Bandara

The Sri Lankan government finds itself in a precarious position, unable to recoup a staggering $6.9 million paid as compensation to a Chinese company over the controversial purchase of a stock of bio-fertilizer because the Sri Lankan authorities failed to keep the letters of credit and the performance bond related to the transaction valid without expiration during the time of the Gotabaya Rajapaksa government, the Auditor General observes.

The Auditor General, in his report, says there is a dereliction of duty on the part of the Agriculture Ministry, the State Ministry of Agriculture, Colombo Commercial Fertilizers Ltd and Ceylon Fertilizer Ltd.
Sri Lanka purchased a shipment of organic fertilizer from China’s Qingdao Seawin Biotech Group Ltd in 2021 in the midst of a crisis in the agriculture sector triggered by the ban imposed by the Gotabaya Rajapaksa government on chemical farming. However, the government declined to accept the stock citing that samples of the stock were found to be contaminated with harmful bacteria. The company disputed the allegation, and the matter led to a commercial dispute between China and Sri Lanka. The government paid US $ 6. 9 million (Rs. 1,382 million).
The present government is in the process of making fresh initiatives to recover the loss. However, the Auditor General said the letters of credit and the performance bond related to the transaction had expired by March 2022.
Asked for a comment on the matter, Agriculture Ministry Secretary Gunadasa Samarasinghe said Sri Lanka will make diplomatic engagements through the Foreign Affairs Ministry to recover the loss.

“We asked about items to be purchased from this Chinese company for the US $ 6.9 million we paid. They cited only organic fertilizer. We have restrictions on the use of organic fertilizer in terms of the plant quarantine law of the country. Now, we try diplomatic means to address this issue by recovering the loss,” he said.

Besides, he said a committee headed by a judge would be appointed to probe the alleged dereliction of duty by the Sri Lankan authorities in the purchase of the controversial stock of organic fertilizer.