India is working with Iran, which has been hit by sanctions, to find a mechanism to sort out the problem of making payments in Indian currency for oil purchase, an Iranian minister said today.
The minister also asked New Delhi to make up its mind on the issue of joining Iran-Pakistan-India (IPI) gas pipeline project.
"Indian government has made a payment of Rs one billion for purchase of oil but since Indian banks have refused to part with their money and no Iranian bank has its branch here, we are working on a mechanism to deal with the situation," deputy minister for Asia, Oceania and Commonwealth (Central Asia) Seyyed Abbas Araghchi told reporters here.
With Reserve Bank of India in December 2010 scrapping a mechanism of settling payments through the Asian Clearing Union route, India has been paying 55% of the value of oil imports from Iran in euros through Turkey's Turkiye Halk Bankasia. The balance 45% of payment for crude oil was made in rupees through UCO Bank, according to sources.
Under the rupee payment mechanism, 45% of the payments made by Indian oil companies for their imports from Iran, which has been hit by sanctions over its nuclear programme, were credited in rupees in the accounts of Iranian banks maintained with UCO Bank.
The visiting minister said that IPI gas pipeline project was going on and was open to all the countries of the region to make use of it.
"It is upto India to make up its mind and join the project we believe would work in India's interest. We and Pakistan are working on it and we are serious about it. Our part is almost finished and now we are helping Pakistan in finishing their part as well. Then I think the pipeline would have capacity for the whole region," he said.
India has security concerns over the project as the proposed pipeline passes through volatile regions of Pakistan's Balochistan province. Also, there is deadlock over transport and transit fee with Pakistan.