New Delhi, Dec.31 (ANI): Indian oil firms are facing a crisis after the Reserve Bank of India's declaration that they can no longer use the Asian Clearing Union, a clearing house set up by the United Nations in the 1970s, for commerce between Asian countries.
India and Iran share a 11 billion dollar oil and gas trade, and the RBI order, long sought by the United States as a way to tighten sanctions against Iran, makes it tougher for Indian companies to buy Iranian oil and gas.
According to the New York Times, the clearing-house allowed Indian companies to pay Iranian companies via the two countries' central banks. But it also meant that the transactions were less transparent, making payments to companies linked to Iranian companies controlled by groups banned under the sanctions regime more obscure.
Central bankers from both countries are likely to meet Friday to resolve the impasse, officials in India said.
"We are working on an alternate settlement mechanism," India's oil secretary, S. Sundareshan, told journalists at a news conference on Thursday.
India's decision to rethink its crude-oil purchasing rules is a sign of the deepening ties between India and the United States.
Weaning India off Iranian oil is particularly difficult now, as supplies are tight, prices are high and India's government is eager to cut subsidized prices its citizens pay for petroleum products.
India imports about 350,000 to 400,000 barrels of oil a day from Iran, about 15 percent of its total crude imports.
Much of that crude is imported by India's state-owned oil companies, because private oil companies in India that were reliant on Iranian imports have pared back their imports in recent years, under pressure from the United States.(ANI)