On his way back from Paris after attending the G-20 meeting, finance minister Pranab Mukherjee stopped at Tabriz airport, north of Tehran, to assure the Mahmoud Ahmadinejad government that India would use Turkish, Russian and UAE banks to clear off the outstanding $2.6 billion dues for crude oil imported from Iran.
For the record, the Tabriz stop was for picking fuel for the India-bound aircraft.
Top government sources said after the RBI disbanded the Asian Clearing Union, a mechanism to settle trade related payments with Iran last December, oil trade with Tehran, close to $12 billion a year, has been hit with no payment settlement system in place.
In June this year, National Iranian Oil Company had sounded off Indian refiners like MRPL and Essar Oil that payment mechanism should be put into place or else oil exports would be stopped from August.
Iran is the second largest crude oil supplier to India after Saudi Arabia.
However, oil exports were never stopped by Iran as India moved swiftly to settle payments through Halkbank, Turkey in liras and UAE Central Bank in euros. These banks were agreeable to the US, which is imposing hurdles against Iranian bank accounts under UN sanctions.
It is understood that Mukherjee told the Iranian interlocutors that as Istanbul headquartered Halkbank and UAE Central Bank were not able to handle the quantum for payments expeditiously, New Delhi will now also use Russian Gazprombank to settle the outstanding bill.
With UN sanctions in place, India is facing problems as even though crude oil exports is out of its purview, banks are reluctant to handle money transfers for the fear of being ostracised by the US and the EU.
India was earlier routing crude oil payments through Iranian EIH bank in Hamburg, Germany but the onward transfer was stopped due to US pressure.