India to pay for Iranian crude in euro

Discussion in 'Economy & Infrastructure' started by LETHALFORCE, Feb 3, 2011.


    LETHALFORCE Moderator Moderator

    Feb 16, 2009
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    New Delhi, Feb 3 (PTI) Ending a six-week long stalemate,India today decided to use euro to pay for Iranian crude oilbut will route the payment through a German bank instead ofits central bank.

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    Banks like State Bank of India (SBI) had refused tofacilitate payments for Iranian oil after RBI on December 23clamped down on the main conduit used by the Indian companiesto pay for the Persian Gulf nation imports, which make up forover 12 per cent of the nation''s oil needs.

    But, Iran had continued to supply oil on credit despitethe outstanding amount crossing a staggering USD 3 billion.

    "It was decided today that euro payments will be madethrough Hamburg-based Europ�isch-Iranische Handelsbank AG (EIHBank)," a finance ministry official said after a high-levelmeeting called to end the deadlock.

    The meeting was attended by National Security AdvisorShiv Shankar Menon, Economic Affairs Secretary R Gopalan,Foreign Secretary Nirupama Rao and Oil Secretary SSundareshan.

    "SBI has been instructed to start clearing the backlogpayments beginning this evening," the official said. Oilcompanies like Essar Oil will transfer money to SBI who inturn will use its Frankfurt branch to route payments to EIH.

    The nation''s largest lender will first clear the over USD2 billion payment backlog for the four month period beginningSeptember 2010.

    An additional USD 1.3 billion worth of oil was boughtafter December 23, when the Reserve Bank of India disallowedpayments for Iranian crude using a long-standing clearinghouse system run by the central banks of nine countries --including India and Iran-- dubbed as the Asian Clearing Union.

    National Iranian Oil Co (NIOC) has an account in EIH andthe Central bank of Germany, Deutsche Bundesbank (DBB) hadcleared it for receiving euro payments for Iranian crude.

    DBB has agreed to receive euro payments for the Iranianoil, provided the importing entity or its bank issues acertificate that the money will not be used for trade in anycommodity that is under UN or European sanction, the officialsaid.

    He added import of crude oil from Iran has not beenbanned by either UN or European Union.

    EIH was suggested for routing payments even earlier butSBI had resisted it fearing its business in US might getaffected. It wanted a comfort from the government and bothNSA and Foreign Secretary fully backed euro payments throughEIH, he said.

    India imported 21.3 million tonnes of crude oil from Iranin 2009-10 and imports in 2010-11 are expected to amount toaround 18 million tonnes, as Reliance Industries has totallystopped using crude oil from the Persian Gulf nation. MORE PTIANZ

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