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India to pay in rupees for Iranian oil
New Delhi: India may revert to paying Iran in rupees for the oil it buys from its third largest supplier as US sanctions will from November 4 block use of US dollars to settle such trades, a top official said Thursday.
Oil refiners such as state-owned Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL) could use UCO Bank or IDBI Bank to route oil payments to Iran, the official added.
US sanctions against Iran come into effect from November 4 and will block banking channels.
The official said refiners have booked oil cargoes from Iran for the current month as well as for October. Payment for oil bought in September would be due in November as Iran provides a 60 days credit period.
India had planned to import about 25 million tonnes of crude oil from Iran in the current fiscal, up from 22.6 million tonnes imported in 2017-18.
But the actual volumes imported may be far less as companies like Reliance Industries have totally stopped buying oil from Iran and others too are scaling it down in hope of winning a sanction waiver from the US.
The official said Iran is open to accepting rupee payment for oil and may use the money to pay for equipments and food items it buys from India.
UCO Bank and IDBI Bank have been identified to route the payment as the two have no exposure to the US financial system. UCO Bank had in the previous round of sanctions handled rupee payments.
Currently, India pays its third largest oil supplier in euros using European banking channels. These channels would get blocked from November.
During the first round of sanctions when EU joined the US in imposing financial restrictions, India initially used a Turkish bank to pay Iran for the oil it bought but beginning February 2013 paid nearly half of the oil import bill in rupees while keeping the remainder pending opening of payment routes. It began clearing the dues in 2015 when the restrictions were eased.
Besides, New Delhi sought to get around the restrictions by supplying goods including wheat, soybean meal and consumer products to Iran in exchange for oil.
The official said this time around the entire 100 per cent of Iranian oil import bill can be paid in rupees.
Iran is India’s third-largest oil supplier behind Iraq and Saudi Arabia. It was India’s second biggest supplier of crude oil after Saudi Arabia till 2010-11. (PTI)