The Telegraph
Friday , June 20 , 2014
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UAE route for Iran oil dues

New Delhi, June 19: Indian crude refiners who owe money to Iran will clear part of their dues through the central bank of the UAE under an interim nuclear arrangement that has allowed Tehran access to $4.2 billion in blocked funds globally.

The payments will reward Tehran for co-operating in nuclear talks that, if successful, will return Iran to the international fold after decades of isolation.

According to the new payment mechanism, India will pay $1.65 billion in three equal instalments of $550 million each. The sum will be transferred to Iran via the UAE central bank, a senior oil ministry official said.

Under a two-stage payment mechanism, Indian refiners, in proportion to their dues, will deposit the money in Uco Bank. This money will be transferred to the RBI for onward credit to the central bank of the United Arab Emirates. The UAE central bank will make the payments in dirhams to Iran.

Since February 2013 when the US blocked payment channels, India has been paying 45 per cent of its Iran oil bill in rupees through a Uco Bank branch in Calcutta. For the rest, it has been waiting for a payment channel.

Officials said the first two instalments might be paid this month and the third $550 million tranche by the July 20 deadline set by the US and five other world powers for Iran to receive part of its past payments from its oil buyers.

Mangalore Refinery and Petrochemicals will pay $238 million in the two instalments this month. Essar Oil will pay $232 million, Indian Oil, $57 million, Hindustan Petroleum $8 million and HPCL Mittal Energy, $15 million.

Iran is seeking interest on pending dues. However, the Indian government and the RBI have refused to pay interest, saying they have always been ready to make timely payments but the problems of mode and channel were because of Iran.

Despite some signs of improving relations between Washington and Tehran, a full deal over Iran’s nuclear activity remains elusive. Iran and six world powers relaunched talks on Tuesday to try to salvage a deal on Tehran’s nuclear activity by July 20.