India, Iran seal oil payment mechanism

Tehran and New Delhi have agreed on a new arrangement for India to make up to 45 per cent of the total payment in rupee for its crude oil import from Iran.

The Bank Markazi Jomhouri Islami Iran — the central bank of the West Asian country — has opened rupee accounts in three Indian banks. Indian companies will make up to 45 per cent of the total payment for their crude oil import from Iran through the rupee accounts of the BMJII.

The two countries hope that the new mechanism will help partially end the impasse over the payment for crude oil export from Iran to India. Fresh sanctions by the United States and embargo by the European Union against the sale of oil from the West Asian country made it difficult for India to pay for its hydrocarbon imports from Iran.

“Fortunately, a suitable mechanism has been found by the two countries. Officials of both countries met last week and the BMJII and its Indian counterpart Reserve Bank of India are happy with the arrangement, which is agreeable to both countries,” said Sayed Mehdi Nabizadeh, Iran’s Ambassador to India.

He told reporters on Tuesday that the two sides agreed on the part payment in rupees as gold was “not a suitable option. Both sides are now satisfied (with the new
arrangements).”

Other options

New Delhi and Tehran are exploring other means for the remaining 55 per cent of payment for crude oil export from Iran to India.

India is the second largest buyer of crude oil from Iran, importing about 352,000 bpd (barrels per day), which amount to 13.5 per cent of West Asian country’s export of 2.6 million bpd. India now pays Iran, the world’s fourth largest oil producer, about $ 1 billion every month.

India has been making payments for Iranian crude oil through Halk Bank of Turkey since the middle of last year.

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