Indian refiners currently owe nearly $6 billion after payment through Turkey’s HalkBank was stopped in February 2013 and some monies were repatriated on US directions last year.
Sources said a directive, framed by India’s Department of Economic Affairs earlier this month, wants refiners to approach their authorized banks to open nostro account.
With Iran’s nuclear talks coming down to the wire, India has directed its refineries to gradually stock up dollars/euros in overseas nostro accounts to avoid a run on the rupee at the time of paying back Iran for crude oil purchases, Indian Express reported.
“In the eventuality of an agreement being reached between P5+1 and Iran by June 30, Iran will request for repatriation of these dues. Depending upon the terms and conditions of the agreement, the payment may be in one go or could be staggered over time, maybe spread over a few weeks,” says a petroleum ministry directive to the five refiners.
“The refineries are directed to earmark the required Indian rupees for meeting their dollar liability. They may buy forex in the spot/forward market in an incremental manner so as to build up the required dollar/euro balance,” says the ministry’s communique.
Sources said the directive wants refiners to approach their authorized banks to open nostro account, an account held in a foreign country denominated in the currency of that country, after clearance from the RBI.
Since February 2013 when US blocked payment channels, India has been paying 45% of its Iran oil bill in rupees through UCO Bank. The remaining 55% in foreign currency has been held up with the refiners for lack of an approved payment channel.
India is one of the biggest oil importers from Iran but has steadily cut the volumes as sanctions from the US and other Western countries blocked payments and crippled shipping routes. Imports have come down from 21.20 million tons in 2009-10 to nearly 13 million tons in 2013-14.
Presently, only Indian Oil, Essar Oil and Mangalore Refinery & Petrochemicals are regular purchasers of Iranian oil.
