Mehrishi to lead 4-member delegation to Iran this week

Days after Iran's historic accord with world powers to end sanctions, Finance Secretary Rajiv Mehrishi will this week lead an official delegation to Tehran to discuss payment of USD 6.5 billion that India owes in past oil dues.
The 4-member delegation for talks on July 25 and 26 will include an official from Reserve Bank of India (RBI) as well as Oil Ministry, senior official said.
"The agenda for talks is oil payment and other bilateral and economic issues," he said.
The delegation will leave for Tehran on July 24.
Mehrishi chaired a meeting on the Iranian oil issue today which was attended by officials of RBI and Oil Ministry.

Iran and six world powers last week sealed an accord to curb the Islamic Republic's nuclear programme in return for ending sanctions. Lifting of sanctions would open up banking channels and Tehran is likely to seek past oil dues.

India is keen that the repayment of dues that have accumulated since February 2013, be done in staggered manner so
as to avoid a run on the rupee.
The official said banking channels as well as payment schedule is likely to be discussed during the two day talks.
Since February 2013, Indian refiners like Essar Oil and Mangalore Refinery and Petrochemicals (MRPL) have been paying 45 per cent of payment due on purchase of crude oil from Iran in rupees. The remaining has been accumulating, pending finalisation of a payment mechanism.

They had last year paid nearly USD 3 billion in six instalments through a limited payment channel following start of nuclear talks between the West and Iran. The outstanding has since climbed to over USD 6.5 billion.
India is keen that Iran continue to give Indian refiners favourable terms - like insurance and shipping as well as 90-day credit period, on oil it sells to India, its second biggest customer after China.
Under US pressure, New Delhi has restricted import of Iranian oil at 11 million tonnes in past two fiscals. But with easing of sanctions, it will look at increasing imports provided Tehran continues to extend the fiscal terms, he said.

During the two day talks, New Delhi is also likely to press for rights to develop ONGC-discovered Farzad-B gas field in the Persian Gulf.
Indian firms have so far shied away from investing in Iran for the fear of being sanctioned by the US and Europe. The same was deterring New Delhi from claiming rights to invest nearly USD 7 billion in the biggest gas discovery ever made by an Indian firm abroad.
But with prospects of sanctions easing, India is making a renewed pitch for rights to develop 12.8 trillion cubic feet of gas reserves ONGC Videsh Ltd had found in 2008.

The official said of the total outstanding to Iran, Essar Oil owes about USD 3.5 billion and MRPL USD 2.5 billion. The rest USD 500 million is to be paid by Indian Oil Corp (IOC).
The official said the government expects payment channels to open soon and Iran making a demand for clearing of past dues.