Indian Oil (IOC) and Mangalore Refinery and Petrochemicals Limited (MRPL) have made a second tranche payment using Germany-based Europaeisch-Iranische Handelsbank (EIH) bank to help clear past oil dues to Iran.
MRPL and IOC, which in May paid USD 750 million to Iran, paid another USD 330 million in June.
Sources said MRPL, which owed Iran USD 2.6 billion before the payments started in May. MRPL paid USD 300 million in June on top of USD 500 million it paid in May. IOC cleared another USD 30 million over and above the USD 250 million it paid in May. The company owed USD 560 million before the payment cycle started.
Essar Oil, which owes close to USD 3 billion, paid USD 100 million in May and it is due to make a second tranche payment of USD 250 million. Hindustan Petroleum (HPCL) had paid USD 17.5 million out of its outstanding USD 23 million. Its joint venture with Mittal Energy, HMEL, owes another USD 60 million.
Sources said the payments in May were routed through Union Bank of India, which in turn transmitted the money to National Iranian Oil Co (NIOC) through HalkBank of Turkey. This month, the refiners are using State Bank of India (SBI), which transfers the euro to NIOC through EIH.
The balance USD 5.4 billion in past oil dues to Iran will be cleared in 2-3 months, they said, adding that the oil companies have been advised to buy foreign currency in a calibrated manner to avoid a run on the rupee.
The payments made in May and in June are the first by Indian refiners in a foreign currency since lifting of sanctions against Iran in January this year. RBI is co-ordinating 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 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 HPCL paid USD 3 million.
The dues to Iran 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 in Kolkata.
The remaining has been accumulating, pending finalisation of a payment route and mechanism. After the lifting of sanctions, Iran has scrapped the 45:55 payment mechanism and is billing Indian refiners in euros since April.