For now, India will pay Iran only $700 million — half of what has been cleared by the US Treasury Department — under the interim nuclear deal of November 2013 that gave Tehran access to $4.2 billion of its oil revenue frozen abroad.
“The finance ministry issued order on Wednesday to release $700 million to National Iranian Oil Company. The order for second payment could be issued next month,” sources said.
US Treasury’s Office of Foreign Assets Control last month approved payment of $1.4 billion in oil dues by Indian refineries to Iran. Sources said the ministry was yet to begin consultations on Iran’s additional demand for $4 billion in three tranches over two months as its processing required prior US consent.
That is because the July nuclear deal allows suspension and eventual termination of sanctions only after the International Atomic Energy Agency verified that Iran had implemented nuclear commitments agreed to in the Joint Comprehensive Plan of Action. Until then, the interim sanctions relief format of November 2013 would continue.
India owes $6.5 billion to Iran for crude oil imports by refiners Mangalore Refinery & Petrochemicals Ltd, Essar Oil, Indian Oil Corp, Hindustan Petroleum Corp and HPCL-Mittal Energy Ltd. In June, the petroleum ministry directed the five to gradually stock up dollars/euro in overseas nostro accounts to avoid a run on the rupee at the time of paying back Iran. India’s tightrope walking on crude oil payments reflects also on the bilateral cooperation between the two countries.
A day after the nuclear deal gained some ground in the US with 34 Senators supporting the cause, the Principal Secretary to the Prime Minister called for a review of the progress made on three possible projects in Iran — Chabahar port and associated rail network, Farzad-B field and petrochemical plant.
The review meeting, to be attended by National Security Advisor, is scheduled for Saturday. India wants Iranian political intervention for a quick resolution before the sanctions are completely lifted.
Following the landmark nuclear deal between Iran and six major world powers on July 14, sanctions are expected to start being removed later this year after IAEA inspectors confirm Tehran is complying with its provisions.