India is set to end its 18-month old arrangement for paying for
Iranian crude oil imports
through Turkish bank Turkiye Halk Bankasi ahead of the imposition of new US sanctions against the Islamic nation, which take effect from 6 February.
Since July 2011, India has paid in euros to clear 55% of its purchases of Iranian oil through Ankara-based Halk Bank, with the balance of payments made in rupees (INR) via Calcutta-based Uco Bank.
“For sure we will have to end paying for Iranian imports through a third country from 6 February,” an Indian Oil Ministry official confirmed. “We have some US$ 1.2bn surplus in the Turkish bank. This will be enough to pay for the next two months of crude oil purchase at the agreed rate of paying 55% of the US$1bn a month of purchases via the foreign bank.”
However, the official said that after March India will be forced to pay for all of its crude oil purchases from Iran in INR, and methods will be devised on how Tehran can use that revenue either by increasing its imports of foodstuffs or tools and machinery, including cars and tractors.
He added that the new US sanctions require the National Iranian Oil Co (NIOC) to essentially keep all the revenue it earns from selling oil to Indian refiners in Uco or any other permitted local bank. These can be used for buying only permissible goods and services.
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