Economy, Business And Markets

India, Iran Working on $6.5b Oil Payment

India, Iran Working on $6.5b Oil PaymentIndia, Iran Working on $6.5b Oil Payment

Indian officials are working with their Iranian counterparts to hash out the details of repaying India’s debt to Iran, accumulated due to financial sanction against Iran.

The Central Bank of Iran and government officials are working on “technicalities” with their Indian counterparts to settle India’s oil import dues worth over $6.5 billion, according to the Economic Times.

“I don’t think it is a major issue. We are talking about economic cooperation. Iran is investing in energy sector in India and India is investing in infrastructure space there,” Iranian Foreign Minister Mohammad Javad Zarif said Friday.

“Our central banks and state officials are working on technicalities in this regard,” Zarif told reporters in India when asked about the dues that Indian oil companies owe Iran.

CBI is getting its unfrozen assets as part of the interim agreement between Iran and the P5+1—United States, Britain, France, China, Russia and Germany—which allows Iran access to $700 million of its frozen assets each month.

Zarif, who arrived in India on Friday, met Prime Minister Narendra Modi and External Affairs Minister Sushma Swaraj, among others.

He is the first key Iranian minister to come to India after the historic nuclear pact between Tehran and the West on July 14, which will lead to lifting of sanctions in exchange for assuring the peaceful nature of Iran’s nuclear activities.

The Iranian government and central bank will go after Iran’s frozen assets—estimated around $100 billion—following the lifting of said sanctions. The assets will give a big boost to Iran’s moribund economy.

During his meeting with Modi, Zarif said Iran considers India as a “strategic partner”.

Iranian Ambassador to India Gholamreza Ansari recently ruled out any ‘’emergency or urgency’’ in getting back $6.5 billion oil import dues from India and had proposed that a part of this corpus can be invested in Indian projects there.

The assurance assumes significance as there were concerns that India might have to make immediate payments to clear these dues after the lifting of western sanctions on Iran. The dues have been pending largely because of curbs on the banking and payment channels connecting Iran.

As per the estimates, more than half of the crude oil bill has remained unpaid in the past two years and has grown to more than $6.5 billion.

India has maintained trade relations with Iran despite the sanctions, especially in terms of crude oil imports. The country has been Iran’s second biggest oil customer after China. Iranian oil has been imported by private as well as public sector refiners in India.

State-run Indian Oil Corp.’s Director A.K. Sharma earlier said India will soon make some part payments and the government is working out modalities and the amount.