India has revealed that it owes Iran $8.8bn in outstanding charges for oil imports. The figure was revealed by India’s trade minister.
India is among Iran’s most important clients, currently ranking 2nd behind China. However, India has been reducing its dependence on Iranian crude following pressure from western nations.
At present the payment structure for Iranian crude is complex. Indian refiners pay 45% of Iranian oil payments into Tehran’s commercial banks’ account with UCO Bank, in Indian Rupees.
The remaining 55% is held back as a result of international sanctions. Iran is able to use funds in the rupee account to import goods from India.
The balance in Iranian commercial banks’ accounts with UCO Bank was $2.86 billion as of March 16 while refiners owed Tehran $5.943 billion as on Feb. 28, Nirmala Sitharaman told lawmakers in a written reply on Friday.
Refiners release funds for Iran from the remaining 55% payment when the West allows Tehran access to its frozen funds overseas.
New Delhi is keen to narrow its trade gap with Tehran, and has allowed India exporters to import non-sanctioned goods into India for sale to Iran.
“The Ministry of Finance has decided that payments to the extent of $100 million per month for such third-country exports to Iran would be allowed from the 45 percent rupees vostro account held with the UCO Bank,” Indian Commerce Minister, Nirmala Sitharaman, said.
Payment over and above $100 million per month would be met from the 55 percent component held by refiners, she said.
