Ahead of Prime Minister Narendra Modi’s visit to Iran, India has initiated the process to pay around USD 6.5 billion it owes to Tehran for crude oil imports.
A couple of days ago, Indian Ambassador to Tehran Saurabh Kumar said that New Delhi recently asked Turkey’s Halkbank to facilitate the payment in euros. The envoy also said that the West Asian nation would receive the full amount ahead of Prime Minister Modi’s arrival in the Iranian capital on May 22. Kumar told the Iranian media that India, one of the biggest customers of Iranian crude, plans to import at least 400,000 barrels per day in the next 11 months. Meanwhile, he admitted that there was a backlog of payments for three years, saying that India failed to pay the amount because of sanctions imposed on Iran by the Western powers over its nuclear programme.
The ambassador expressed hope that Prime Minister Modi’s upcoming visit to Iran would strengthen bilateral ties. He stressed that Indian Petroleum Minister Dharmendra Pradhan and External Affairs Minister Sushma Swaraj recently visited the country to push for development rights to the vast Farzad B gas field. Although Oil and Natural Gas Corporation (ONGC) of India had discovered the offshore block in 2008, the state-run Indian company is yet to get permission to develop the block due to the sanctions against Iran. In April, Pradhan discussed the issue with the top Iranian political leadership and also informed them about New Delhi’s interest in developing Chabahar port. Now, it is up to the PM to finalise these projects.
Asked why India identified Turkey’s Halkbank to facilitate the payment, Kumar said that the Iranian banking and financial systems were in trouble because of the international quarantine of the country. As the Iranian banking system will take some time to integrate with global processes, India has very limited options to route its payments, he added. According to the envoy, India considers the Turkish bank as the best option to make the payment, as Halkbank agreed to pay the amount in euros. The envoy recalled that India had never halted oil imports from Iran (even during sanctions) and maintained the status of the West Asian country’s second-biggest oil client after China. It means, according to Kumar, India considers Iran as a serious trade partner.
For the last few years, Iran has been using its own shipping lines to deliver the crude because major shipping entities could not be involved due to the restrictions on trade with the country. Now, Tehran wants India to make its own arrangements. “While the payment of dues issue is in the throes of being resolved with the help of the External Affairs Ministry, the other matter to be sorted is regarding the shipment of crude oil from Iran,” stressed a senior Indian official.