India is considering clearing
some of its pending oil payments to Iran through the United Arab
Emirates central bank, under a system that would enable Washington to keep a an
eye on the flow of the funds.
India will be making a payment
of $1.65 billion under this system which involves sending funds through the US
Federal Reserve.
Tehran has been permitted to
access $4.2 billion in blocked funds, which can be seen as a token of
appreciation for Tehran's cooperation in the nuclear talks.
Asian countries like Japan
and South Korea have made payments in accordance with a schedule decided upon
by world powers in November.
The payment has been divided
into eight instalments, ranging from $450 to $650 million each, from February
to July. India will be taking the last three instalments of $550 million each.
Under the new system, RBI would purchase dollars from authorised currency
dealers. The RBI would then ask the Federal Reserve to transfer dollars to the
UAE central bank's account there.
The Western sanctions on Iran
prevented access to banking channels for tansfer of crude oil payments, affecting its
economy.
Iran has asked India to pay
$1.65 billion in three equal instalments through the UAE central bank. The
system used to make the payments is complex but will ensure transparency.
Firstly, Indian refuners
would be directed to deposit money in rupees to the account of an Iranian bank
with UCO Bank, which would be transferred to the RBI for remitting to a new
account held by the UAE central bank.
The UAE central bank would
then make payments to the Iranian central bank in dhirams. Once the RBI
receives payment confirmation, they would remit an equivalent sum in dollars in
the UAE account at the Fed. The RBI would also pay for the dollar purchases
using funds in the UAE rupee account at the Indian central bank.
Indian oil refiners Mangalore
Refinery and Petrochemicals Ltd (MRPL.NS), Indian Oil Corp. (IOC.NS), Essar Oil
(ESRO.NS), Hindustan Petroleum Corp (HPCL.NS) and HPCL-Mittal Energy Ltd. will
have to pay about $4 billion to National
Iranian Oil Co.
In the first two instalments,
MRPL would be paying nearly $238 million, Essar $232 million, IOC $57 million,
HPCL about $8 and HPCL-Mittal about $15 million. India has been making 45 per
cent of the payments by remitting rupees into Iranian account with UCO Bank,
which Tehran plans to use to import goods from India.
India had relief on Turkey's
Halkbank HALBK.IS pay for its oil purchases but this channel was closed in
February 2013.
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