Reliance Industries (RIL), the largest private company in the country, has decided to stop gasoline supplies to Iran after fulfilling all contractual obligations.
This follows a letter written by eight US Congressmen to that country's Export-Import Bank (Exim Bank) asking it to immediately suspend all financial assistance to RIL until the company agrees to stop selling gasoline to Iran.
The Exim Bank has provided two separate loan guarantees worth $900 million, including a $400-million loan by JPMorgan in August. The loan was for funding RIL's expansion programme.
Sources in the know said the decision will not impact RIL's business as the quantity of supplies was not substantial. The company has diverted supplies to other regions, including Europe and the US.
When contacted, an RIL spokesperson said, "As a corporate policy and to maintain business confidentiality, we don’t comment on specific transactions."
The letter written by the eight Congressmen said that RIL, being a major supplier of gasoline to Iran, is detrimental to the national security interests of the US and the loan is in direct collision with its foreign policy on Iran.
The four-page letter was signed by Congressmen Brad Sherman, Mark Steven Kirk, Howard L Berman, Edward R Royce, Steve Israel, Steven R Rothman, Ron Klein and Gary Ackerman. Of these, while Berman is chairman of the powerful House Committee of Foreign Relations, Sherman, Ackerman, Klein and Royce are its members. Israel and Rothman are members of the House Appropriations Committee.
"Given the apparent lack of consideration of the relationship between Iran and RIL during the approval of the two loan guarantees packages for RIL, we further urge that you take whatever action necessary to secure an understanding with Reliance that before any undisturbed guarantees are released, Reliance will commit to ceasing its gasoline shipments to Iran," the lawmakers said.
The letter from the House of Representative members follows another sent by Senators Joe Lieberman and Jon Kyl early November, who also raised similar concerns about Ex-Im Bank's ties with RIL.
Ex-Im had then defended its role saying, "Ex-Im is not aware that Iran is among the largest markets of RIL's energy products. In fact, RIL has informed us that sales to Iran from its existing refinery present only a small portion of RIL's total trade activities."
"The bank has communicated to RIL regarding the letter from the lawmakers and put pressure on them to withdraw from supply to Iran. The company has responded to the concerns of the bank and lawmakers immediately since it did not want to spoil its relations in the US," the sources said.