India, Iran Explore Payment Options For Crude Imports.

NEW DELHI: India and Iran are working on a long-term solution to settle payments for crude oil imports from the Gulf nation through banks in South Korea and Russia after New Delhi managed to pay long pending dues to Tehran through Turkey's Halkbank.

At a bilateral meeting held in the Indian capital on Wednesday, the two sides have decided that both governments will also explore other stable payment options such as through won and rouble, government officials with direct knowledge of the matter said.

India has so far paid around $5 million to Iran in euros through Turkey's Halkbank. "But this arrangement can also come under the US pressure as happened in the case of the Germany-based EIH Bank," one official said requesting anonymity.

In February 2011, India had made part payments for Iranian crude oil import through German bank EIH, but due to the US pressure, that route was soon closed. Due to resistance from the US, India is unable to pay Iran in dollars.

India's crude oil imports from Iran had faced an impasse for over six months after the Reserve Bank of India had declared that a regional clearing house that involved the Iranian central bank could no longer be used to settle oil and gas transactions between the two countries.

India imports more than 80% the 184 million tonnes of crude oil it refines every year, and Iran accounts for over 16% of these purchases, making it the secondbiggest supplier, trailing Saudi Arabia.

"Both countries are in talks with banks in Russia and South Korea. We have to see how far these two countries are willing to support Iran," said an official requesting anonymity.

The two countries are hopeful about some positive outcome as Russia and South Korea have existing trade relations with Iran, officials said. "We need to see if they will let us use their banks and allow us to use their currency as the move would put additional pressure on them (from the US)," said another government official who had attended the meeting.

The finance ministry, in a statement, said that a delegation from the Islamic Republic of Iran had met an inter-ministerial delegation from India to discuss several issues, including matters relating to settlement of payments on account of bilateral trade between the two countries.

The Indian side of the delegation was represented by officials from the finance ministry, the commerce ministry, the oil ministry and the RBI.

The oil payment crisis had started after RBI discontinued payment settlement through the Asian Clearing Union (ACU) for crude oil payments to Iran due to the US pressure. ACU, an initiative of the United Nations Economic and Social Commission for Asia and Pacific (ESCAP), was established in 1974 at Tehran for promoting regional co-operation.

It facilitates payments among member countries for eligible transactions on a multilateral basis.

Source : economictimes.indiatimes.com