India to start paying $6.5 billion oil dues to Iran

India will begin paying over $6.5 billion of past oil dues to Iran in tranches from this month, with the first instalment of up to $1.4 billion being finalised. "Shortly there will be some part payments. <g data-gr-id="25">Government</g> is working out modalities and the quantum," IOC Director (Finance) A K Sharma said here on Thursday.

RBI will help create payment channels to clear the past dues. "We will make dollar payments to RBI which will transmit it further," he said. "We are waiting for instructions to make payments." The Reserve Bank had previously facilitated payment of oil import bill to Iran. After the US and western powers in 2011 blocked payment channels in a bid to bring Iran to the negotiating table over its controversial nuclear programme, RBI had facilitated oil payments to Iran via Turkey. "We do not know yet how much instalment will be paid but our share I believe should not be more than $60-70 million," he said. Since February 2013, Indian refiners like Essar Oil and Mangalore Refinery and Petrochemicals (MRPL) have been paying 45 per cent of payment due on purchase of crude oil from Iran in rupees through <g data-gr-id="26">Uco</g> Bank, Kolkata.

The remaining has been accumulating, pending finalisation of a payment mechanism. They had last year paid nearly $3 billion in six instalments through a limited payment channel following <g data-gr-id="28">start</g> of nuclear talks between the West and Iran. The outstanding has since climbed to over $6.5 billion. 

Essar Oil owes $3.34 billion, MRPL $2.49 billion and IOC $581 million to Iran. RBI representative was part of a four-member delegation led by Finance Secretary that visited Tehran on July 25 and 26. 

Iran and six world powers last month sealed an accord to <g data-gr-id="27">curb</g> the Islamic Republic’s nuclear programme in return for ending sanctions.