Reporting "Asre Bazar","The Indian government is seeking to pay the $6.5-billion debt and is looking to prepare the banking activities. The receiving bank for this money will be Turkey's Halkbank, and the money will be paid in euros," news agency Fars quoted Indian Ambasador Saurabh Kumar as saying in Tehran. Iran has been demanding faster payment of oil dues and in euros. India has put the process into motion ahead of Prime Minister Narendra Modi's May 22-23 trip to Iran.
During his recent visit, Oil Minister Dharmendra Pradhan had told Iranian officials that India was committed to making the payment as and when banking channels, acceptable to both sides, were available. Mangalore Refinery & Petrochemicals, Essar OilBSE -0.15 % , Hindustan Petroleum, HPCLMittal Energy and Indian Oil had imported Iranian oil when the sanctions were in place. At that time, India made 45% of the payments in the rupee.
The arrears were to be paid when the banking channels started working for Iran. Although most of the sanctions are now lifted, Iranian banks are yet to be integrated into the global banking system, making payment still a problem. According to sources here, Iran plans to utilise the $6.5 billion to boost its domestic infrastructure besides investments in the energy sector.
Iran says it needs $200 billion worth investments for its energy sector. During Modi's visit, India is looking to boost its energy partnership with Iran. After China, India is the second largest importer of Iranian oil and it started buying additional oil post sanctions. The figure reached 5,00,000 barrels per day (bpd) this March, the highest by India from Iran in five years.
India is keen to purchase more from Iran and the PM's visit will focus on this, besides initial pacts on Oil & Natural Gas Corp's participation in Iran's Farzad-B gas field and investment in exploration of more fields and downstream sectors, as well as a gas pricing formula.