Comments
More than three months after the Reserve Bank of India scrapped a long-standing clearing 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 €1.5 billion has been made to the Central Bank of Iran,” the Oil Minister, Mr S. Jaipal Reddy, told the Lok Sabha in a written reply today.
After the RBI in December stopped the use of a long-standing clearing mechanism for payments, India had last month decided to pay for the Iranian oil using euros through the 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 the 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 mechanism, 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 $3 billion.
The Minister said 21.2 million tonnes of crude oil was imported from Iran in 2009-10 fiscal. Mangalore Refinery imported 6.9 mt, Essar Oil 5.3 mt, Reliance 3.3 mt, Hindustan Petroleum 3.2 mt and Indian Oil 2.5 mt.
This fiscal, Reliance has completely stopped using Iranian oil and in the first six months, 8.9 mt of oil was imported from Iran, Mr 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 buy 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.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.