Ahead Of PM Modi's Visit, Indian Refiners Clear Part Of $6.4 Billion Dues To Iran

Tehran, Iran: Ahead of Prime Minister Narendra Modi's maiden visit to Iran, Indian refiners have cleared part of the $6.4 billion owed to the country for crude oil imports in euros. The payments made over the last couple of days are the first in four years.

India built up a backlog of payments when the Persian Gulf nation was under Western sanctions due to its nuclear programme in 2011.

State refiner Mangalore Refinery and Petrochemicals Ltd paid $500 million while Indian Oil Corp has settled $250 million through the Union Bank of India, sources said.

However, it is not yet known when the second instalment will be paid, the sources added.

The refiners had been holding back 55 percent of the oil payments to Iran after the route to make payments through Halkbank was stopped in 2013, although payment of some of those funds was allowed after an initial temporary deal to lift the sanctions.

India is one of the biggest buyers of Iranian crude, and is set to import at least 400,000 barrels per day from Iran.

After the lifting of sanctions, Iran has scrapped the 45:55 payment mechanism and is since last month billing Indian refiners in euros.

PM Modi is making a first trip to Iran since he took office in 2016, aimed at deepening energy ties. During the visit, India will sign a contract to build and operate the port of Chabahar on the southern Iranian coast that is aimed at boosting connectivity with Afghanistan and central Asia.