Ratings agency ICRA today said the credit profile of Indian oil firms rated by it will not be impacted in the short run by RBI's recent decision to bar dollar and euro payments for imports from Iran.
"Credit profile of ICRA rated downstream oil companies will not be immediately impacted by the recent move of RBI to stop facilitating payments for Iranian crude oil imports," ICRA said in a statement.
ICRA has the highest long-term rating of 'LAAA' with a stable outlook on bank lines of the Mangalore Refinery and Petrochemicals (MRPL), besides an 'LAAA' on long-term bonds programme of Indian Oil Corporation Ltd (IOC).
It also has an 'A1+' rating, suggesting low credit risk, outstanding on short-term debt and commercial paper programme of Chennai Petroleum Corporation Ltd (CPCL).
RBI on December 23 said oil and other import payments to Iran will have to be settled outside the existing Asian Clearing Union (ACU) mechanism, which involves the central banks of India, Bangladesh, Maldives, Myanmar, Iran, Pakistan, Bhutan, Nepal and Sri Lanka.
Under the ACU mechanism, imports by the nine nations are settled every two-months with every member paying for imports after netting out its exports among the union.
Till 2008, payments under the ACU mechanism were done in US dollars but after United States imposed sanctions against Iran over its suspected nuclear programme, the currency shifted to euro.
United Nations sanctions do not forbid buying Iranian oil and recently the European Central Bank (ECB) asked RBI and other central banks of ACU to provide certificates that the euro being used to import products are not on US sanctions list.
However, according to sources, RBI chose to scrap the entire system itself even though certification for crude oil imports was easy to provide and track.
"While the oil companies concerned are making efforts to find a way out, it is unclear at this juncture as to when will the issue be resolved," ICRA said.
According to the ratings agency, the issue would have minimal impact for IOC and CPCL as Iran accounts for only 3-4 per cent of their oil sourcing.
"However, MRPL imports about 7.6 million tonne per annum from National Iranian Oil Company (NIOC), accounting for around 60 per cent of its annual crude oil requirements...MRPL has crude oil inventory of around one month (including in-transit and secured by existing payment mechanism), which should facilitate smooth operations of the company for January 2011," it said.
However, according to it, if the issue remains unresolved beyond a month, MRPL's refining throughput could be impacted.
