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India to Pay 1.5% Interest on $6.5 Billion Oil Dues
Economy, Business And Markets

India to Pay 1.5% Interest on $6.5 Billion Oil Dues

India has agreed to pay Iran 1.5 % interest on $6.5 billion that refiners like Essar Oil and Mangalore Refinery (MRPL) owe it in oil dues, as a ‘goodwill gesture’.

Iran had sought an interest rate of Libor-plus 75 basis points on the $6.5 billion Indian refiners owe it in past oil dues, to make up for the foreign exchange losses, the Economic Times reported on Tuesday.

“Although we believe there is no interest due, but as a goodwill gesture oil companies have agreed to pay the interest rate,” an Indian Finance Ministry official said. “Seven days US Libor plus 75 basis points equals to an interest rate of about 1.5 %.”

The demand for interest rate was made when Indian Oil Minister Dharmendra Pradhan met Iran’s central bank governor, Valiollah Seif, in Tehran on April 9.

Iran wanted interest to be paid after differences cropped up over the foreign exchange rate. Iran sold oil to refiners like Essar Oil and Mangalore Refinery and Petrochemicals Ltd (MRPL) in US dollars. Around 45% of the oil bill was paid in rupees in a UCO Bank account while the remaining 55% was to be cleared whenever banking channels open.

 

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