TEHRAN (ISNA)- India is expected to pay Iran $700 million on Wednesday as part of the plans to clear the outstanding oil dues.
The payment will be the first release of such funds following the conclusion of the nuclear talks between Iran and the five permanent members of the UN Security Council plus Germany back in July.
Following the agreement, which paved the way for the removal of sanctions against Iran, US Treasury’s Office of Foreign Assets Control (OFAC) verified the payment of $1.4 billion by Indian refiners in two equal installments to Tehran.
It’s not immediately clear when the second payment will be made. But some unnamed sources say the equal amount will be paid in October.
According to a report by Reuters, the payment will be made through Oman’s Bank Muscat.
Indian refineries will make payment in rupees to India’s UCO Bank which will exchange the money into US dollar and transfer it into the Central Bank of Iran’s account with Oman’s Bank Muscat.
Sources familiar with the issue said the Indian bank has already bought dollars in the forward markets.
Indian refineries should pay some $6.5 billion in outstanding oil dues to Iran.
Essar Oil has to pay Iran about $3.1 billion, Mangalore Refinery and Petrochemicals Ltd owes $2.8 billion, and Indian Oil Corp owes $581 million. HPCL-Mittal Energy Ltd (HMEL) has to pay $97 million and Hindustan Petroleum Corp owes $29 million.
India is seen as Iran’s biggest oil client after China. However, New Delhi was forced to slash crude purchases from Iran due to the US-led sanctions which hit Iran’s energy sector back in 2012.