 This file photo shows a motorist holding a fuel pump at a petrol station in downtown Tehran. AFP photo. |
An Indian delegation will leave Friday for Tehran to resolve a dispute over payments for crude oil coming from Iran to India as the current crisis threatens to disrupt supplies.
A delegation led by Indian Additional Financial Services Secretary Rakesh Singh and comprised of officials from the Petroleum Ministry and ONGC Videsh Limited, or OVL, will visit Tehran to negotiate with the National Iranian Oil Company, or NIOC, on the mode of payment for crude oil purchases. The issue has dogged the two countries for nearly a month.
The current crisis results from U.S.-imposed sanctions that bans payment in dollars and also makes it difficult for India to route payments through the traditional Asian Clearing Unit, or ACU, route, Indian daily The Hindu reported.
“The delegation will go on Jan. 14. We have to work out some currency other than the dollar in which payments could be made for the Iranian oil,” Financial Services Secretary R. Gopalan told reporters.
Mr. Gopalan said the options for settlement being considered at present are the euro, the yen or the dirham. He admitted that paying for the Iranian crude in rupees would be difficult.
India has no other option but to find a solution to this issue as Iran is the second largest oil supplier to India after Saudi Arabia, a Petroleum Ministry official said.
Reserve Bank of India, or RBI, officials held talks with a delegation of the Central Bank of the Islamic Republic of Iran last month to break the deadlock, but nothing could be worked out.
Public sector oil companies in India, the major importers of crude oil, have already expressed concern at the RBI's decision not to allow the Tehran-headquartered ACU to be used for making payments to Iran. One of the solutions suggested by the Petroleum Ministry was that the Central Bank of the Islamic Republic of Iran could open an account with the RBI in India for companies to make direct payments, something that has not found favor with the RBI.
Another option being discussed is that India could write to the European Union seeking exemption from the certification process required for imports from Iran. Until October 2010, the transactions between the two countries were carried out in euros through the ACU, which was set up in 1974. The clearinghouse settles trade transactions with Bangladesh, Bhutan, India, Iran, Nepal, Pakistan, the Maldives, Myanmar and Sri Lanka.
In the absence of a mutually acceptable payment mechanism, India may not be in a position to import 10 million barrels of crude oil from Iran next month. India imported 21.3 million tons from Iran in 2009-10; imports are expected to be 18 million tons this year.
A delegation led by Indian Additional Financial Services Secretary Rakesh Singh and comprised of officials from the Petroleum Ministry and ONGC Videsh Limited, or OVL, will visit Tehran to negotiate with the National Iranian Oil Company, or NIOC, on the mode of payment for crude oil purchases. The issue has dogged the two countries for nearly a month.
The current crisis results from U.S.-imposed sanctions that bans payment in dollars and also makes it difficult for India to route payments through the traditional Asian Clearing Unit, or ACU, route, Indian daily The Hindu reported.
“The delegation will go on Jan. 14. We have to work out some currency other than the dollar in which payments could be made for the Iranian oil,” Financial Services Secretary R. Gopalan told reporters.
Mr. Gopalan said the options for settlement being considered at present are the euro, the yen or the dirham. He admitted that paying for the Iranian crude in rupees would be difficult.
India has no other option but to find a solution to this issue as Iran is the second largest oil supplier to India after Saudi Arabia, a Petroleum Ministry official said.
Reserve Bank of India, or RBI, officials held talks with a delegation of the Central Bank of the Islamic Republic of Iran last month to break the deadlock, but nothing could be worked out.
Public sector oil companies in India, the major importers of crude oil, have already expressed concern at the RBI's decision not to allow the Tehran-headquartered ACU to be used for making payments to Iran. One of the solutions suggested by the Petroleum Ministry was that the Central Bank of the Islamic Republic of Iran could open an account with the RBI in India for companies to make direct payments, something that has not found favor with the RBI.
Another option being discussed is that India could write to the European Union seeking exemption from the certification process required for imports from Iran. Until October 2010, the transactions between the two countries were carried out in euros through the ACU, which was set up in 1974. The clearinghouse settles trade transactions with Bangladesh, Bhutan, India, Iran, Nepal, Pakistan, the Maldives, Myanmar and Sri Lanka.
In the absence of a mutually acceptable payment mechanism, India may not be in a position to import 10 million barrels of crude oil from Iran next month. India imported 21.3 million tons from Iran in 2009-10; imports are expected to be 18 million tons this year.
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