NEW DELHI: India has agreed to pay an interest of 1.5 per cent for the oil dues worth $6.5 billion to Tehran as a ‘goodwill gesture’. The interest paid will compensate the foreign exchange losses Iran will incur for the delayed payment on its shipments.
Over the last three years since the UN sanctions on Iran came into effect, India has paid 45 per cent of its dues in rupees through UCO Bank, while another 55 per cent of the shipment cost was agreed to be paid when the blockade on banking channels with other foreign currencies were lifted.
Iran had sought an interest rate of Libor-plus 75 basis points on the $6.5 billion.
“Although we believe there is no interest due, but as a goodwill gesture oil companies have agreed to pay the interest rate,” a Finance Ministry official said.
With Western sanctions lifted in January 2016, Iran had requested for the payment to be completed. However, difference in foreign exchange rates over the years and India wanting to pay at the rates prevailing during the time of purchase led to negotiations.
The demand for interest rate was made when Oil Minister Dharmendra Pradhan met Iranian Central Bank Governor Valiollah Seif in Tehran on April 9. Iran sold oil to refiners like Essar Oil and Mangalore Refinery and Petrochemicals Ltd (MRPL) in US dollar per barrel.