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Ahead of PM Modi’s visit, Indian refiners clear part of $6.4 bn dues to Iran

Sources said the remaining outstanding will be cleared in installments to avoid a run on the rupee.

By: PTI | Tehran | Updated: May 22, 2016 5:40 am
Narendra Modi, Modi Iran visit, Modi Iran, PM Modi Iran visit, Indian oil refineries, India Iran The refiners cleared part of their outstanding towards crude oil they buy from Iran, through Union Bank of India which in turn transmitted the payment to National Iranian Oil Co (NIOC) through HalkBank of Turkey.

Ahead of Prime Minister Narendra Modi’s maiden visit to Iran, Indian refiners have made first euro payments in four years to clear a part of the USD 6.4-billion in past oil dues. Mangalore Refinery and Petrochemicals Ltd (MRPL) has paid USD 500 million and Indian Oil Corp (IOC) USD 250 million over the past two days, sources with direct knowledge of the development said.

Private sector Essar Oil is to pay USD 500 million. The refiners cleared part of their outstanding towards crude oil they buy from Iran, through Union Bank of India which in turn transmitted the payment to National Iranian Oil Co (NIOC) through HalkBank of Turkey.

Read | Clear air on ‘plot’ to link Iran to terror attack: Shia cleric 

They bought US dollars and deposited with Union Bank which did an onward transmission in euros. This the first payment by Indian refiners in a foreign currency since lifting of sanctions against Iran in January this year. This also comes days ahead of Modi’s two-day visit to Tehran beginning Sunday during which reestablishing credible banking channels between the two nations is likely to figure prominently during talks.

Read | PM Modi lands in Tehran today: India bid to warm up to Iran as it steps out of cold

Sources said the remaining outstanding will be cleared in installments to avoid a run on the rupee. RBI is coordinating the repayments, they said. With sanctions blocking banking channels, Indian refiners have since February 2013 paid nearly half of the oil import bill in rupees while keeping the remainder pending opening of payment routes.

The dues on the count now total to USD 6.4 billion. MRPL owed USD 2.6 billion, out of which it has now paid USD 500 million. After payment of USD 250 million, IOC is now left with an outstanding of USD 310 million. Essar Oil owes Iran about USD 2.6 billion while HPCL- Mittal Energy Ltd has to pay USD 60 million.

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The refiners had last paid USD 700 million to Iran in October using a limited window provided by the US to clear some of the outstanding using the dollar. At that time, Essar Oil had paid USD 338 million while MRPL had remitted USD 299 million.

IOC had paid another USD 60 million while Hindustan Petroleum Corp (HPCL) paid USD 3 million. That payments today come on top of USD 700 million the four refiners had cleared on September 30, 2015.

The dues to Iran on crude oil that refiners buy have accumulated as western sanctions blocked payment routes since 2013. Since February 2013, refiners like MRPL and Essar Oil have been paying 45 per cent of dues on purchase of crude oil from Iran in rupees through UCO Bank, Kolkata.

The remaining has been accumulating, pending finalisation of a payment route and mechanism. They had in 2014 paid nearly USD 3 billion in six installments through a limited payment channel following start of nuclear talks between the West and Iran. After the lifting of sanctions, Iran has scrapped the 45:55 payment mechanism and is since last month billing Indian refiners in euros.

Sanctions were imposed on Iran over its nuclear programme in 2011, blocking financial channels. This refiners routing payments to Iran in Euros through Turkey but the route also blocked in 2012 with tightening of sanctions. The payments made over the last couple of days are the first Euro payments in four years.

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  1. Y
    Yakobi
    May 21, 2016 at 7:34 pm
    A great economy by a hindu cooked standard, not being able to pay 6. 2 billion dollars , excluding non payment mark up, at once, without having any impact on hindu artificially inflated currency, Let hindu stupid , be a hindu stupid, spending more then, hindu debt ridden hindu borrower can spend, by depositing posti tuting hin d of lady india as a collator.
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    1. Y
      Yakobi
      May 21, 2016 at 7:42 pm
      They could have been paid in hindu worthless currency Rupee, they held it back, just to use capital for their own use, without markup, sanctions were just an other hinduism excuse.
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      1. T
        Togi
        May 21, 2016 at 3:36 pm
        Iran should never trust India for they are getting close to Israel.
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        1. N
          nagarajan
          May 22, 2016 at 3:51 am
          It is shameful to own foreign country money, that too Iran is our nations good friend. Whoever the business strategist Iran brothers should left without bread and butter by owning their money. Mr.Modi most of the time spending for businessman it should not be government agenda at common people tax money. Where is the black money?
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          1. R
            Rakesh
            May 22, 2016 at 3:42 am
            It should
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