India, Iran resolve oil payments dispute
03 February 2011
India will make payments for oil imported from Iran, its second biggest supplier of crude in Euros as Iran could no longer use the Asian Clearing Union (ACU) for settling payments.
The State Bank of India (SBI) will organise payments of the $2 billion in dues to Iran through Germany's Europaisch-Iranische Handelsbank (EIH), petroleum ministry sources said.
The Reserve Bank of India (RBI) was forced to look for alternate routes of payment to Iran after the US and the EU blocked dollar payments to Iran through the Asian Clearing Union.
The US believes Tehran was using the ACU to evade international sanctions.
The ACU is a regional South Asian payment mechanism between nine nations including India and Iran, through which payments can be made either in dollar or euro. It is and run by the central banks of the member nations.
Iran had earlier insisted it would not trade outside the ACU mechanism.
It is being rof India and other countries.
Indian oil firms import around 80 per cent of their crude oil requirements and is heavily dependent on Iranian oil. The blocking of payment gateway in the wake of fresh sanctions has left the companies without a way to pay for the supplies.
While the UN imposed a fresh embargo on normal trade with Iran - the fourth in a series - the US and the European Union have slapped further restrictions on trade with Iran over its clandestine nuclear programme.
SBI, which was earlier reported to be against making payments through EIH, is reported to have agreed to dealings with EIM after assurances from the government and the Reserve Bank of India.
India and Iran have been looking for an alternative way to make payments for oil shipments after the RBI said in December they could no longer use the ACU facility (See: India, Iran may soon break impasse over crude oil payment)