|India to Iran: Use pending oil payments to buy medicines, food||
In a move that could help India clear its pending oil payments to Iran, the Indian government is planning to allow Iran to use the money to pay for humanitarian goods such as food and medicines bought in third countries.
India owes Iran an estimated $3 billion to $4 billion in pending oil payments as it has not been able to transfer the money in dollars or euros for more than a year. This is due to sanctions put in place by the U.S. and the EU against Iran for its nuclear program.
Since humanitarian goods are not covered by the sanctions either by the UN or the West these can be easily paid for by India if the required processes are put in place. “We plan to start the process as soon as possible,” a government official told Business Line.
The Indian Finance Ministry has asked UCO Bank to put in place the necessary payment arrangements, the official said. This could be done in dollars or euros without attracting any western sanctions.
“We are hopeful that we will be able to pay off a substantial part of the pending payments through this method.”
India put in place a rupee payment system for making 45 percent of oil payments to Iran in Indian rupees in an account in UCO Bank. The amount was used to pay Indian exporters to Iran.
But, it is the remaining 55 percent amount held by India in IOU (I Owe You – pending payment) account that is bothering Iran.
On pursuing oil and gas exploration opportunity in Iran that was put on hold following the sanctions, the Indian Ministry for Petroleum and Natural Gas has now expressed that India is willing to take up work in the discovered Farsi offshore block, now named Binaloud. This discovery was made by ONGC.
India, however, feels that Iran needs to rework the contract and make it more attractive. ONGC Videsh Ltd is keen to develop the Farzad-B gas find. The gas has been discovered by OVL and its Indian partners.
The gas field is estimated to hold in-place reserves of up to 21.68 trillion cubic feet (Tcf), of which 12.8 Tcf of gas and 212 million barrels of condensate may be recoverable.
(Source: The Hindu Business Line)
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