(Adds comment from Turkish government official in 10th par)
By Manoj Kumar and Nidhi Verma
NEW DELHI Dec 10 Indian and Iranian officials
are meeting this week to discuss how to unlock the first oil
payments to Iran since the United States and other world powers
eased sanctions last month in exchange for curbs to Tehran's
Last month six world powers and Tehran reached an interim
deal that provided limited relief to Iran from economic
sanctions, opening the way for some oil payments to resume.
The deal is a chance for Iran's new leadership to revive the
country's economy, plagued with high inflation and a weakened
currency since being cut off from the global financial system
after sanctions were imposed in 2012.
The West believes Iran is trying to make a nuclear bomb,
while the Middle Eastern nation says its nuclear programme is
for power generation.
India and Iran are to discuss how to restart oil payments in
foreign currencies, including a plan to process partial payments
for oil in euros through a Turkish bank, two government sources
A delegation of Iranian officials led by Gholamali Kamyab,
deputy governor at Iranian Central Bank, is in India until Dec.
13. The group met officials of the finance ministry and Reserve
Bank of India on Tuesday.
Arvind Mayaram, a senior official at India's finance
ministry, said that for now, India would not release dollar
payments it was holding back from Iranian imports.
He said the meeting had mostly focused on the implications
of the new deal on issues of insurance - a problem for shipping
under the sanctions - as well as ways to increase oil imports
from Iran and exports from India.
Iran had asked Indian refiners in mid-October, before the
deal was reached with world powers, to resume paying for oil
imports in euros through Turkey's Halkbank but the
refiners are still seeking direction from the Indian government.
"We have not received any request either from Iran or India.
If one of the parties wants to pay the bill via Halkbank we will
be pleased to process that payment," a senior Turkish government
India started settling 55 percent of its payments for
Iranian crude in euros through Halkbank in mid-2012. The rest
was settled in rupees through India's UCO Bank.
But the Halkbank route was halted in February this year when
fresh sanctions prevented Iran from repatriating cash earned
from oil it has been able to sell, crippling its economy by
choking off its biggest revenue stream.
Since then Indian refiners have been withholding payment for
55 percent of their Iranian oil imports, while Iran scouted for
an alternative way to receive that money in hard currencies such
as the dollar and the euro.
At the end of November Indian refiners owed about $2.2
billion for partial payments to Iran, refinery sources said.
About $3 billion worth of rupees, paid by refiners are lying in
Tehran's account with UCO Bank, Arun Kaul, chairman of the bank
said after the meeting.
India is Iran's second-largest buyer but its oil imports
from the OPEC member plunged to about 170,000 bpd in the
April-October period, a decline of about 40 percent from a year
ago, tanker arrival data made available to Reuters showed.
A finance ministry official said this week India would
continue to settle part of its oil payments in rupees through
UCO Bank until receiving further information on the lifting of
U.S. and EU sanctions on Iran.
India wants to fix its trade imbalance with Iran, tilted now
in favour of Tehran because of oil purchases. New Delhi wants to
boost its exports to the Islamic nation by letting Iran pay for
goods in the billions of rupees it has in UCO Bank.
Indian exports to Iran are expected to touch $6 billion in
the year to March 31, 2014, almost double last fiscal year's
$3.2 billion, said Ajay Sahai, director general, Federation of
Indian Export Organisations (FIEO).
He said the rupee trade mechanism had helped exports of
agricultural commodities, pharmaceutical and auto components to
Tehran. An industry delegation will visit Iran next week to push
up exports, industry sources said.
(Additional reporting by Orhan Coskun in Ankara; editing by Tom
Hogue and Keiron Henderson)