India to pay Iran $900 mn in oil dues in 2 tranches

India has agreed to pay Iran $900 million as part of the pending oil dues to that country in two tranches, beginning next week, as part payment of frozen oil revenues that are overdue.

Indian refiners, including Mangalore Refinery and Petrochemicals, Ltd (MRPL), Essar Oil, Indian Oil Corporation (IOC) and Hindustan Petroleum Corporation Ltd (HPCL), will pay $400 million to Iran on Monday, the second installment in an interim deal that allows Tehran to recover part of overseas assets.

The remaining $500 million will be paid before 24 November.

This will be over and above $1.65 billion it had paid in June-July to clear more than one-third of over $4 billion in dues that had accumulated.

India, the second largest oil importer after China, imported about 267,800 barrels per day (bpd) of crude from Tehran.

Iran's share of total Indian oil imports was about 7 per cent in the first nine months of this year compared with 4.9 per cent last year, tanker data showed.

The delay in payments is due mainly to the United States blocking payment channels to Iran over its nuclear programme.

Since February 2013, India has been paying 45 per cent of its Iran oil bill in rupees through a UCO Bank branch in Kolkata. For the remainder, it had been waiting for a way to make the payment.

Indian refiners will deposit rupee payments equivalent to $400 million in the UCO Bank account, which will now be transferred to the RBI for onward credit to the central bank of the United Arab Emirates, which will make payments in dirhams to Iran.

Since July 2011, India has been paying in euros for 55 per cent of its purchases of Iranian oil through Ankara-based Halkbank. The remaining 45 per cent was remitted in rupees through UCO Bank.

The Euro payments ceased from 6 February 2013, but the portion of rupee payments continued through Uco Bank.