» Business » Payments to Iran for crude oil imports resume

Payments to Iran for crude oil imports resume

March 03, 2011 15:12 IST
More than three months after RBI scrapped a long-standing payment mechanism used to pay for Iranian crude imports, India has resumed payments to the nation's second largest oil supplier using an alternative system.

"Pending dues of National Iranian Oil Company (NIOC) are now being cleared and as of March 1, 2011, payment of Euro 1.5 billion has been made to the Central Bank of Iran," Oil Minister S Jaipal Reddy told the Lok Sabha in a written reply.

After the Reserve Bank of India in December stopped use of a long-standing clearing mechanism for payments, India had last month decided to pay for the Iranian oil using euros through German-based Europisch-Iranische Handelsbank AG (EIH Bank).

"Consequent to the withdrawal of the Asian Clearing Union mechanism by the RBI with effect from December 23, 2010, all payments to Iran for import of crude oil have to be settled in any permitted currency outside the ACU mechanism," he said.

India imports 12 million barrels of crude oil every month from Iran, which is the nation's second-largest supplier after Saudi Arabia.

After the scrapping of the ACU, Iran, which makes up for over 12 per cent of India's oil needs, had continued to supply oil on credit despite the outstanding amount crossing a staggering $3 billion.

Reddy said 21.2 million tons of crude oil was imported from Iran in 2009-10 fiscal. Mangalore Refinery imported 6.9 million tons, Essar Oil 5.3 million tons, Reliance 3.3 million tons, Hindustan Petroleum 3.2 million tons and Indian Oil 2.5 million tons.

This fiscal, Reliance has completely stopped using Iranian oil and in first six months 8.9 million tons of oil was imported from Iran, Reddy said. Sources said as per the requirement of the German central bank, Deutsche Bundesbank (DBB) - which had permitted payment in euros through EIH - each drop of oil bought from US-sanctioned Iran is being certified.

First, the oil companies are certifying the crude oil they bought from Iran and payments that are due. This is being counter-certified by the Petroleum Ministry. Furthermore, State Bank of India - the banker which is to route the payments - is also affixing its seal on the transactions.

© Copyright 2019 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.