India prepares to pay $400 mn under interim deal to Iran

The payments would be made using an existing mechanism that foresees a series of back-to-back transactions in different currencies that are initially channelled through the Reserve Bank of India

Iran has sought payment of $400 million from India under an interim deal with six world powers that allows the Opec nation to recover part of its overseas frozen oil revenues, industry sources said Wednesday.

"I think payment to Iran would be cleared by Friday or by Monday as the RBI (Reserve Bank of India) will have to notify the exchange rate and it also has to buy dollars for further payments," said one of the sources.

The sources declined to be named due to the sensitivity of the matter. The payments would be made using an existing mechanism that foresees a series of back-to-back transactions in different currencies that are initially channelled through the RBI.

On receipt of the funds from refiners, the RBI would buy dollars from authorised dealers. It would instruct the Federal Reserve to transfer dollars to the United Arab Emirates' central bank account there, after confirmation

According to the plan, India's Mangalore Refinery and Petrochemicals Ltd would pay about $183 million, Essar Oil Corp $172 million, Indian Oil Corp $41 million and Hindustan Petroleum $4 million, the sources said.

Iran's top oil client after China, India has imported 38 percent more oil from Tehran in the first nine months of this year than in the same period last year, tanker data shows.

Iran and the United States, China, France, Germany, Britain and Russia agreed in July to extend a six-month interim accord until November 24 after they failed to meet a July 20 deadline for reaching a long-term deal to end their nuclear dispute.

Nuclear talks are due to resume on Wednesday in Vienna. The six powers want Iran to scale back its uranium enrichment programme to ensure it cannot produce nuclear bombs. Iran says the programme is for peaceful purposes.

In return for continuing action to curb its nuclear programme, Iran during the four-month extension has been granted access to $2.8 billion of its funds held in foreign banks, in addition to $4.2 billion paid between January and July.

Tehran has already received $1 billion from Japan under the interim deal, state news agency IRNA reported last month.