State-owned Mangalore Refinery and Petrochemicals (MRPL) today said that the National Iranian Oil Company had assured them to continue crude supply even as the dues have exceeded USD 1 billion. “Yesterday, there was a meeting with Iranian officials and they assured us to continue crude supplies to the company and wait till a mechanism is found out to clear their dues,” MRPL managing director U K Basu said, on the sidelines of an Assocham seminar here.

The meeting has allayed fears of adverse impact on the refinery’s normal operations, which are largely dependent on Iranian crude as it is more suitable when compared to other crude.

Basu expects that by July 15, a mechanism would be worked out by the joint team, formed by ministry of external affairs, ministry of finance, ministry of petroleum and the RBI.

After the mechanism is in place, payment would be settled accordingly, he said.

The payments are due since January 2011. The problem came up after the apex bank withdrew existing Asian Clearing Unit (ACU) mechanism, used in South Asia to settle transactions, including crude payments to Iran, on December 23.

“After that, we couldn’t open the letter of credit (LC). The first LC was due for opening in the 1st week of January,” Basu said.

“We are the largest crude importers from Iran. Last year, we had taken close to 7.5 million tonnes and this year also we would be taking a similar range. Though the contracted amount would be 7.1 million tonnes, we may have to exceed that,” he added.

MRPL also sourced crude from Saudi Arabia and Kuwait, but in very limited quantity. Their dependence on Iran is close to 60 per cent, for which they have no substitute.

India procures around 20 million tonne of Iranian crude, out of the total import of 188 million tonnes, Basu said.

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