IOC, MRPL pay $330 mn more in 2nd tranche to Iran

Indian Oil Corporation Limited (IOC) and Mangalore Refinery and Petrochemicals Limited (MRPL) have made a second tranche payment using German bank Europaisch-Iranische Handelsbank AG (EIH) to help clear past oil dues to Iran.

MRPL and IOC, which last month paid $ 750 million to Iran, paid another $ 330 million this month through EIH bank.

Sources said MRPL, which owed Iran $ 2.6 billion before the last month, paid $ 300 million this month and $ 500 million in May.

IOC cleared another $ 30 million over and above the $ 250 million it paid in May. The company owed $ 560 million before the payment cycle started.

Essar Oil, which owed close to $ 3 billion, last month paid $ 100 million and it is due to make a second tranche payment of $ 250 million.

Hindustan Petroleum Corporation Limited (HPCL) had paid $ 17.5 million out of $ 23 million it owed. Its joint venture with Mittal Energy, HPCL-Mittal Energy Limited, owes another $ 60 million.

Sources said the payments last month were routed through Union Bank of India, which in turn transmitted the money to National Iranian Oil Co (NIOC) through HalkBank of Turkey.

This month, the refiners are using State Bank of India, which transfers the euro to NIOC through EIH.

The balance $ 5.4 billion in past oil dues to Iran will be cleared in 2-3 months, they said, adding that the oil companies have been advised to buy foreign currency in a calibrated manner to avoid a run on the rupee.

The payments made in May and this month are the first by Indian refiners in a foreign currency since lifting of sanctions against Iran in January this year.

RBI is co-ordinating the repayments, they said.

With sanctions blocking banking channels, Indian refiners have since February 2013 paid nearly half of the oil import bill in rupees while keeping the remainder, pending opening of payment routes.

The refiners had last paid $ 700 million to Iran in October using a limited window provided by the US to clear some of the outstanding using the dollar.

At that time, Essar Oil had paid $ 338 million while MRPL had remitted $ 299 million. IOC had paid another $ 60 million while HPCL paid $ 3 million.

The dues to Iran on crude oil that refiners buy have accumulated as western sanctions blocked payment routes since 2013.

Since February 2013, refiners like MRPL and Essar Oil have been paying 45% of dues on purchase of crude oil from Iran in rupees through United Commercial Bank in Kolkata.

The remaining has been accumulating, pending finalisation of a payment route and mechanism.

After the lifting of sanctions, Iran has scrapped the 45:55 payment mechanism and is billing Indian refiners in euros since April.