India stares at $6.5 bn oil import dues to Iran

 Finance Secretary Rajiv Mehrishi and officials from RBI will travel to Tehran on Friday to discuss payment of $6.5 billion (over Rs 41,000 crore) India owes to Iran towards purchase of crude oil from the country.

The dues have been accumulated since 2013. India wants the payment to be made in instalments but apprehends it will have to clear the dues immediately after the lifting of western sanctions against Iran.

Iran, however, said there was no urgency to make the payments immediately. According to an agency report, Iran Ambassador to India Gholamreja Ansari said the two countries could find a mechanism to settle the dues over a period of time. Since February 2013, Indian refiners like Essar Oil and Mangalore Refinery and Petrochemicals have been paying 45 per cent of payment due on purchase of crude oil from Iran in rupees.

The remaining has been accumulating, pending finalisation of a payment mechanism. The dues have been pending largely because of curbs on the banking and payment channels connecting Iran.Now that the sanctions are to be lifted, the banking channels will be opened. Indian officials will discuss the payment mechanism with the Iran authorities, sources said.

Besides, India also wants Iran to continue giving Indian refiners favourable terms like insurance and shipping and the 90-day credit period on sale of oil to India. India is Iran’s second largest consumer of oil after China.