As US lifts sanctions, Iran wants India to pay oil dues in euros

Iran will be opening or re-activating euro accounts with Indian banks and would like to have the money transferred from refiners into these accounts.

By: PTI | New Delhi | Updated: February 7, 2016 12:10 pm
iran, india oil, iran sanctions, us sanctions on iran, us lifts iran sanctions, india oil import, oil import india, india oil prices, india news A general view shows a unit of South Pars Gas field in Asalouyeh Seaport, north of Persian Gulf, Iran. (File/REUTERS)

Iran has asked Indian refiners such as Essar Oil and Mangalore Refinery and Petrochemicals Ltd (MRPL) to clear its past oil dues amounting to over $6 billion in euros within six months.

With US lifting sanctions, Iran has told Indian authorities that the three-year old mechanism, paying 45 per cent of oil import bill in rupees and keeping the remaining 55 per cent pending for payment channels to clear, has come to an end.

The pending payments now total to over $6 billion which Iran has agreed to receive in installments over the next six months, sources privy to the development said.

Central Bank of Iran’s vice governor Gholamali Kamyab has conveyed to Indian authorities that crude oil proceeds from now on would be in euro as Iran would not be able to undertake US dollar settlement through the US financial system.

Iran will be opening or re-activating euro accounts with Indian banks and would like to have the money transferred from refiners into these accounts.

The Persian Gulf nation is talking to State Bank of India (SBI) for the purpose and has also opened an account with IDBI.

Also, it wants settlement with India through the Asian Currency Union (ACU) and has written to the Reserve Bank of India (RBI) in this respect, they said.

Kamyab stated that National Iranian Oil Company (NIOC) would ask buyers of crude in India to open Letters of Credit (Lcs) in favour of Central Bank of Iran with SBI as was the case in past, sources said adding settlement could be done through the ACU and IDBI would be used for the purpose.

Since February 2013, Indian refiners like Essar Oil and MRPL have been paying 45 per cent of their import bill in rupees to UCO Bank account of Iranian oil company. The remaining has been accumulating, pending finalisation of a payment mechanism.

With the lifting of sanctions, the payment channels will reopen and Iran is seeking the pending $6 billion in euros. The payments would be done in installments to prevent a run on the rupee with MRPL likely to be asked to clear its outstanding of close to $3 billion first.

Indian Oil Corp (IOC), which owes over $400 million toIran, may be the second in the queue followed by smaller payments by HPCL-Mittal Energy Ltd (HMEL) and Hindustan Petroleum Corp.

Essar Oil may be the last to clear its about $3 billion dues.

Sources said Iran has not yet decided on utilisation of the $3 billion which has accumulated in the rupee account with UCO Bank.

It could use the money to make payments for imports of steel and other commodities from India.

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  1. R
    Feb 8, 2016 at 2:40 am
    Both Persia and India are sensible with good sense and a solution would be found to continue the trade for many more years to come!
    1. M
      Feb 8, 2016 at 3:28 am
      Every time you hear modi bhakt you know logic doesn't exist in their thought process... Oil has always been traded in USD, that'the reason Libya happened. Since Iran can't receive payment in dollars they want the other high value stable currency... I'm sorry I'm trying to reason with you... You probably think since crude oil now costs 1/3 of what it did we should pay for our petrol cos modi ji government says so...
      1. V
        Varun Chaitwal
        Feb 7, 2016 at 12:46 pm
        6 billion euros is a lot of money to fund islamist violence worldwide
      2. A
        Feb 7, 2016 at 8:37 am
        This RSS government is not capable of convincing Iran convincingly to accept the dues in Indian Rupees and with extended period for settlement. Since Iran is a Islamic nation, the superiority complex of RSS will force them to rub with them on the wrong side and cause the general public to suffer.
        1. A
          Feb 7, 2016 at 2:16 pm
          Yes, India should not repay this money because it will be used to fund islamist violence worldwide. This amount should be given to RSS/VHP and they will use it efficiently for Ghar Wapsi and Love Jihad, creating nationalists for India.
          1. R
            Feb 7, 2016 at 11:34 am
            Ch..tiya, rupee is not a foreign reserve currency. Your g@@ndoo COngress' rule weakened its value so much that no one is willing to accept it. Back to licking the Italian's backside now, bootlicker.
            1. R
              Feb 7, 2016 at 11:35 am
              Eh? So when you CONgi dogs signed the agreement to pay in dollars and euros why didnt you include the rupee option? Everytime you listen to Modi haters you realize that they are brainless fools with no knowledge of anything except bootlicking.
              1. D
                Feb 7, 2016 at 10:57 am
                This is simply business and a long term commitment. Iran is a trusted business partner for India and hence when the time has come to pay them for the oil they supplied, simply India should honour the terms agreed. Further, Iran India trade is going to be a major factor for the growth of both countries. So what is happening is natural and Iran is a good business partner for India.
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