The CPC Iran debt was cut to US$130.6 million by June 2025 after the Ceylon Petroleum Corporation settled a portion of its liability to the National Iranian Oil Company through a tea-for-oil barter arrangement, the Finance Ministry’s mid-year report shows.
CPC Iran debt reduced to $130.6M by June 2025 through a Tea-for-Oil barter settlement
Sri Lanka’s state-run Ceylon Petroleum Corporation has lowered its outstanding obligation to Iran to US$130.6 million as of June 2025, down from about US$191 million a year earlier, according to the Finance Ministry’s mid-year fiscal report. The reduction in the CPC Iran debt was achieved through a Tea for Oil Barter Agreement under which tea shipments were used to offset part of the fuel supplier liability. Officials say the settlements reflect a pragmatic response to recurring foreign exchange shortages that have forced the corporation to rely on supplier credit when dollar liquidity tightens.
The report traces the origin of these supplier debts to earlier currency crises, noting that liabilities to Iran first appeared during the 1999–2001 episode and were compounded in later crises. In subsequent years, private supplier credit was often converted into state bank loans, creating an added domestic debt burden. The Finance Ministry describes the most recent barter settlements as a targeted measure to stabilise energy supplies while managing limited foreign exchange reserves.
Economists and policy observers point to the structural issue underpinning such arrangements: when the Treasury or state corporations face restricted access to dollars—occasionally after monetary measures intended to ease domestic interest rates—companies like the CPC turn to supplier financing as an operational stopgap. While barter deals can preserve short-term fuel supplies and reduce headline external liabilities, they also underline the economy’s sensitivity to currency volatility and the need for more resilient forex management.
Analysts caution that while the CPC Iran debt reduction improves the headline position, it does not by itself resolve longer-term vulnerabilities stemming from repeated reliance on non-commercial financing routes. They recommend parallel measures such as strengthening export receipts, improving price discovery in fuel procurement, and enhancing coordination between fiscal and monetary authorities to reduce the frequency of emergency supplier credit. The Finance Ministry’s account, which highlights the role of barter in the most recent cycle, signals a continuing policy challenge: balancing immediate energy security with sustainable external debt practices.