India pays Iran €1.5b in oil dues

March 5, 2011 - 0:0

Indian refiners have made payment of 1.5 billion euro for crude bought from the National Iranian Oil Company, ending over two months of supply concerns after the RBI scrapped a regional money-transfer mechanism.

""Pending dues are now being cleared and as of March 1, 2011, payment of 1.5 billion euro has been made to the Central Bank of Iran,"" oil minister S Jaipal Reddy told the Lok Sabha on Thursday.
Indian refiners buy 12 million barrels of crude every month form Iran, which makes up about 12% of oil imports. Uncertainty over these supplies arose after the RBI scrapped the Asian Clearing Mechanism, an arrangement that allowed SAARC nations to do business with Iran that faces UN and U.S. sanctions.
Though Indian refiners could not pay for crude, Iran continued to supply crude in view of the long relationship with India. As a result, the outstanding had gone up to $4 billion.
The payments are being routed through the German central bank, Deutsche Bundesbank, which has allowed payment in euro through EIH Bank. Refiners are certifying the oil they bought, which is then being vetted by the oil ministry. SBI is routing the payments from India and certifying the transactions.
Iran is the second-biggest supplier of oil to India, after Saudi Arabia. Reddy said over 21 million tons of crude was imported from Iran in FY10. ONGC's refining arm MRPL imported 6.9 million tons, Essar Oil 5.3 million tons, RIL 3.3 million tons, HP 3.2 million tons and IOC 2.5 million tons. RIL has since stopped using Iranian oil.
sanctions do not forbid buying Iranian oil and the European Central Bank asked the RBI to provide certificates that the euro is being used to import products that are not on the sanctions list. Sources said while certification for crude oil imports was easy to provide and track, the RBI chose to scrap the system altogether.
(Source: Times of India)