Even as the talks between India and Iran on working out a method of making payments for crude oil purchases remained inconclusive, India is working on a formula that will be acceptable to both and help resolve the crisis that threatens to hit oil supplies.
Reserve Bank of India officials held talks with a delegation of the Central Bank of the Islamic Republic of Iran on Friday to break the deadlock, but the talks did not yield any solution.
The public sector oil companies in India, the major importers of crude oil, have expressed concern at the RBI's decision not to allow the Tehran-headquartered Asian Clearing Unit (ACU) to be used for making payments to Iran.
Petroleum Ministry officials said one of the options that emerged at a recent meeting in the Finance Ministry was that the Central Bank of the Islamic Republic of Iran would open an account with the RBI in India for the companies to make direct payments.
The other was that India could write to the European Union (EU), seeking exemption from the certification process required for imports from Iran. It is felt that at a later date, the ACU could recognise a currency other than the dollar and the Euro. An Indian delegation would soon visit Tehran to work out the modalities for payment.
The RBI said that the meeting between the two sides was a technical one to discuss modalities for future trade transactions, including in oil. Till October 2010, the transactions between the two countries were carried out in Euro through the ACU, which was set up in 1974. The clearinghouse settles trade transactions with Bangladesh, Bhutan, India, Iran, Nepal, Pakistan, the Maldives, Myanmar and Sri Lanka.
Iran is India's second largest crude oil supplier, after Saudi Arabia, meeting more than 12 per cent of its needs. In the absence of a mutually acceptable payment mechanism, India may not be in a position to import 10 million barrels of crude oil from Iran next month. India imported 21.3 million tonnes from Iran in 2009-10; the imports are expected to be 18 million tonnes this year.
