India asks Iran to use pending oil payments to buy food and medicines
05 June 2014
Faced with difficulties in transfer of funds to Iran, India has asked the sanction-hit country to use the money to pay for purchase of essential goods such as food and medicines in third countries.
Since humanitarian purchases are not covered by western or UN sanctions, such an arrangement would help India to clear its pending oil payments to Iran without attracting western sanctions, finance ministry sources said on Wednesday.
The ministry has already instructed UCO Bank, which handles oil accounts with Iran to make arrangements for payments in dollar or euro for Iran's third-country purchases.
India owes Iran nearly $4 billion for oil purchases as payments have been held up for more than a year because of the sanction curbs on transfer in dollars or euros put in place by the US and the EU against Iran for its alleged nuclear activities.
Iran, which has been among the largest crude oil supplier to India, has now been replaced by countries such as Iraq and Nigeria because of western sanctions.
India has been paying 45 per cent of the Iran oil bill in rupees through an account operated by UCO Bank ad these were used to pay Indian exporters to Iran.
The sanctions imposed on Iran have also badly affected India's pursuit of oil and gas exploration opportunities in Iran.
India, meanwhile, has expressed interest in taking up work at the Farsi offshore block, now named Binaloud, where ONGC had discovered oil. ONGC Videsh Ltd is also keen to develop the Farzad-B where OVL and its partners have discovered gas
India, however, wants Iran to rework the contract and make it more attractive for the investing companies.