MRPL to clear Iran oil dues

The Dollar Business

Mangalore Refinery and Petrochemicals (MRPL) on Thursday announced that they are willing to pay the dues of oil imported from Iran as soon as the banking channels become available. MRPL and other refineries were enjoying the free-shipping modalities that Iran had extended, when the west had imposed sanctions against it.

H Kumar, MRPL Managing Director told the media that as the sanctions on Iran were now lifted, there would be clarity in the payment channels. He also added that as soon as the banking channels are cleared, MRPL will make the payments. He was responding to the issue of clearing $6.5 billion oil dues to Iran by Indian refiners that also included MRPL. 

Responding to the reasons for deferring payments, Kumar said, during the sanction period, the agreement with Iran was that 45 percent of the import cost was to be paid in Indian rupees with the remaining 55 percent being paid in euros. But lack of banking methods during the sanction led to payments getting deferred.

But, MRPL and other refineries upon getting the necessary clearance from the RBI, shall pay for the crude oil. Essar oil and MRPL owe nearly $6.5 billion to Iran.

Referring to Iran’s decision to end free shipping of crude oil to India, Kumar said they were discussing the possibilities, while formalities were being worked out for the benefit of refineries like MRPL and Essar oil in paying for the freight.

Iran had agreed to ship almost free of cost, the crude oil to India in November 2013. This decision was taken as the shipping lines of other countries refused to transport crude oil from Iran due to the sanctions imposed on the country. As a result its exports took a dip. It was then decided that the National Iranian Oil Company would share 80 percent of the freight cost instead of the 100 percent.