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Envoy: Settlement of Iran-India Oil Payment Issues Imminent

Service : Economy
TEHRAN, May 30 (ICANA) – A senior Iranian diplomat voiced optimism about the imminent settlement of oil payment issues between Iran and India, saying that the problem will likely be resolved tomorrow.
Monday, May 30, 2011 8:29:06 PM
Envoy: Settlement of Iran-India Oil Payment Issues Imminent

Speaking to reporters after a meeting with Indian finance ministry officials, Iran's Ambassador to India Seyed Mahdi Nabizadeh voiced optimism that the existing problems in the way of crude oil payments between Iran and India would be resolved in a Tuesday meeting between representatives of the two sides.

India has been trying for an alternative payment mechanism for crude from Iran after Germany reportedly refused to channelize payments through its central bank.

India had on February 3 decided to pay for the Iranian oil using euros through German-based Europaisch-Iranische Handelsbank AG ( EIH Bank).

The problem arose when the Indian Central Bank said import payments to Iran would have to be settled outside the existing Asian Clearing Union (ACU) mechanism.

Under the ACU mechanism, every two months imports by the nine member-nations are settled by every member paying for its import surplus.

Iran had earlier insisted it would not trade outside the ACU mechanism.

Iran is the second largest crude oil exporter to India after Saudi Arabia and sends some 1 billion dollar crude oil to the country monthly.

Early in March, India's oil minister announced that New Delhi had started making overdue payments to Iran for oil imports after the two countries agreed on a mechanism for crude oil payments.

Sudini Jaipal Reddy said that Iran and India agreed on a new mechanism to clear the payments to the Central Bank of Iran.

"Pending dues of National Iranian Oil Company are now being cleared and as of March 1, 2011, payment of €1.5 billion has been made to the Central Bank of Iran," the Indian oil minister stated on March 3.

Jaipal further said around 21.2 million tons of crude oil was imported from Iran during the fiscal year of 2009-2010 (from March 21, 2009 to March 21, 2010).

The development came after Indian Minister of Finance Pranab Mukherjee said that his country was doing its best to find a solution to payment currency issues in oil deals with Iran.

Mukherjee in a meeting with Iran's Minister of Economic Affairs and Finance Seyed Shamseddin Hosseini in early March assured his Iranian counterpart that India would like to make the payment due to Iran "as expeditiously as possible specially on account of oil and oil products", an official statement said today.

Mukherjee said at the time that India was working out an arrangement through German central bank Deutsche Bundesbank to expedite payment to Iran.

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