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Iran asks India to pay oil dues in euros

Iran has asked Indian refiners such as Essar Oil and Mangalore Refinery and Petrochemicals Ltd (MRPL) to clear its past oil dues amounting to over $6 billion in euros within six months. With US lifting sanctions, Iran has told Indian authorities that the three-year old mechanism, paying 45 per cent of oil import bill in rupees and keeping the remaining 55 per cent pending for payment channels to clear, has come to an end. The pending payments now total to over $6 billion which Iran has agreed to receive in installments over the next six months, sources privy to the development said. Central Bank of Iran’s vice governor Gholamali Kamyab has conveyed to Indian authorities that crude oil proceeds from now on would be in euro as Iran would not be able to undertake US dollar settlement through the US financial system.

Iran will be opening or re-activating euro accounts with Indian banks and would like to have the money transferred from refiners into these accounts. The Persian Gulf nation is talking to State Bank of India (SBI) for the purpose and has also opened an account with IDBI. Also, it wants settlement with India through the Asian Currency Union (ACU) and has written to the Reserve Bank of India (RBI) in this respect, they said.

Kamyab stated that National Iranian Oil Company (NIOC) would ask buyers of crude in India to open Letters of Credit (Lcs) in favour of Central Bank of Iran with SBI as was the case in past, sources said adding settlement could be done through the ACU and IDBI would be used for the purpose.

Since February 2013, Indian refiners like Essar Oil and MRPL have been paying 45 per cent of their import bill in rupees to UCO Bank account of Iranian oil company. The remaining has been accumulating, pending finalisation of a payment mechanism.
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