Only a stop-gap arrangement, say officials.
Weeks after the Reserve Bank of India (RBI) clamped on the main conduit used by Indian companies to pay for Iranian oil, the Gulf country has agreed to sell on credit this month.
Till early last week, there were no problems in supplies as the payment mechanism had been decided prior to RBI closing the Asian Clearing Union route, a move that effectively stops settlements in the dollar and the euro.
“Pending resolution of the gridlock, Iran has agreed to sell crude oil on credit this month,” a senior official said.
The nation’s largest importer of Iranian crude, Mangalore Refinery and Petrochemicals Ltd (MRPL), along with Indian Oil Corp (IOC) and Hindustan Petroleum Corp Ltd (HPCL), will get some six million barrels of crude on 60-90 days credit.
“This is a stop-gap arrangement. This cannot last long and a permanent solution has to be found,” the official said.
India has asked Iran to identify a panel of banks, which were not under US sanctions, to route payments to National Iranian Oil Co (NIOC).
State Bank of India, the nation’s largest lender, is ready to facilitate payments but is not willing to deal with any bank on the US sanctions list.
The two nations have so far not been able to find a solution as to how New Delhi should pay for Iranian oil imports after RBI said payments to Iran could no longer be settled using a long-standing clearing house system run by regional central banks.
An Indian delegation would visit Teheran on January 14 to explore payments in yen, euro and dirham.
The official said SBI had refused to route payments through Hamburg-based EIH Bank, which Iran had last week identified as a temporary channel for routing money to NIOC.
NIOC has an account with the bank but SBI felt as the bank was already under US sanctions, its business in America might get affected from dealing with EIH.
“Some nine banks, mostly in UAE, have been identified. Details will be discussed at the January 14 meeting in Tehran,” he said.
Iran is India’s second-largest supplier of crude oil after Saudi Arabia. India imports $12 billion of crude annually from Iran — about 14 per cent of its total crude import bill. MRPL buys 7.1 million tonnes of Iranian oil while IOC and HPCL import three million tonnes each. Private sector Essar Oil imports about five million tonnes.
