Economy, Business And Markets

India to Settle Oil Debt

India to Settle Oil DebtIndia to Settle Oil Debt

India’s oil import dues to Iran will be transferred to Iran as soon as the nuclear accord Tehran signed with the six world powers takes effect, said Hussein Yaqoubi, director of the Central Bank of Iran’s Department of International Affairs.

Economic and banking sanctions had resulted in the freezing of the assets and “the CBI is determined to repatriate the assets” now that reconnection to international trade systems is easing and expected to normalized early next year.

“CBI had asked the Indians a few months ago in meetings in Tehran to take quick measures to settle the issue of their oil dues,” he was quoted as saying by IRNA.

“We have required them to pay in euro and not in Indian rupees. Iran needs the money to pay its foreign debts and for financing domestic projects.”

Indian refiners owed about $6.6 billion to Iran as of the end of August. Essar Oil owes about $3.1 billion, Mangalore Refinery and Petrochemicals Ltd $2.8 billion, followed by Indian Oil Corp, which owes $581 million to the Iranian government. HPCL-Mittal Energy Ltd’ debt to Iran is $97 million and Hindustan Petroleum Corp has to pay $29 million.

The CBI and government officials worked on “technical issues” with their Indian counterparts to settle the oil import dues, the Indian newspaper Economic Times had reported back in August.

The US Treasury’s Office of Foreign Assets Control approved payment of $1.4 billion by Indian refiners in two equal installments to Tehran back in September. The two installments were paid to Tehran through the Indian bank UCO.

 Banking Ties

Iran-India banking relations will be reenergized after the Joint Comprehensive Plan of Action (JCPOA) takes effect, according to Yaqoubi. Several accounts have been opened by the two countries’ lenders while waiting for the ultimate lifting of the international sanctions on Iran which will serve as a “turning point” in bilateral banking ties.

 “The two economic ministers have signed a MoU which allows Iranians to open  banks in India as well as certifying Iranian banks to open branches in New Delhi and Mumbai.” Yaqoubi said. He elaborated that the Indian side has promised to accelerate the process of issuing permits for Parsian Bank, Bank Pasargad and Saman Bank to open branches in the two cities. Mumbai is said to be the ‘commercial capital’ of India.

An Iranian delegation headed by Ali Tayyebnia, minister of economy arrived in New Delhi on Friday to attend a session of the Iran-India Economic Commission. The delegation includes representatives from the Ministry of Roads and Urban Development ministry, Ports and Maritime Organization, CBI and the Oil Ministry.

As the CBI representative visited India Yaqoubi said that “the Export Guarantee Corporation of India has increased the credit ceiling for Iran to about $ 1 billion from the previous $150 million.”

Of that, $250 million dollars will go for buying railroad and other equipment from India while the remaining $750 million will be allocated to a variety of domestic projects. He added that “a positive point of the credit line is that no portion of Iran’s money will be kept as guarantee by the Indian side.’’