India may restart Iran oil import

[StormShadow]

New Delhi: Prime Minister Manmohan Singh has sought USD 25 billion cut in oil import bill to narrow current account deficit, Oil Minister M Veerappa Moily said on Tuesday.

India, which paid about USD 170 billion last fiscal for importing oil, is renewing imports of the fuel from Iran as unlike imports from other countries, it pays the Persian Gulf nation in rupees.

"Oil (imports) is one of the components responsible for CAD. Prime Minister has told us to save USD 25 billion in import bill. As of today, we have pieced together a plan to save USD 22 billion in import bill," Oil Minister M. Veerappa Moily told reporters here.

A large part of the plan includes restarting import of oil from Iran. As US and western sanctions blocked all payment routes, India pays Iran in rupees in a UCO Bank branch in Kolkata.

Officials said if India was to import 10 or 11 million tonnes oil from Iran this fiscal, it could save a minimum of USD 10 billion in foreign exchange outflow. India had last fiscal imported 13.1 million tonnes of oil from Iran.

India has been, since July 2011, paying in euros to clear 55 per cent of its purchases of Iranian oil through Ankara-based Halkbank. The remaining 45 per cent due amount was remitted in rupees in accounts Iranian oil company opened in Kolkata-based Uco Bank.

Payments in euro through Turkey ceased from February 6 this year and now Iran is paid only in rupees. Rupee payment helps save foreign exchange outgo, thereby reducing CAD. Moily refused to divulge details of his plan to cut oil import bill but said the savings planned will be 1 per cent of the GDP.

India, which in June won another 180-day waiver from the US sanctions after it cut crude oil imports from Iran by over 27 per cent, did not buy any oil from the Persian Gulf nation in first four months of current fiscal as insurance firms refused to provide cover to refiners processing Iranian oil.

Imports have, however, resumed this month with Mangalore Refinery and Petrochemicals Ltd (MRPL) getting the first shipload on August 17.

Indian Oil Corp (IOC) and Hindustan Petroleum Corp Ltd (HPCL) are likely to follow suit shortly while private sector Essar Oil, the other customer of Iranian oil, has continued to import oil from Tehran.

India had in 2012-13 imported 13.14 million tonnes of crude oil from Iran, down from 18.11 million tonnes of 2011-12. Iran was till 2010-11 India's second largest supplier after Saudi Arabia but has since slipped to the sixth place.

Economic crisis may prompt India to restart Iran oil import | Deccan Chronicle

 

[Gandhi G in da house]

Why did we stop in the first place ?

 

[rockstarIN]

We should, our interests first...!

 

[Indo-guy]

will it be so easy after demarche to ambassador of Iran for unconditional release of Indian ship ?

We have anyways have little options left besides to swallow our pride and fall in line ....

 

[El Weirdo]

Why did we stop in the first place ?

US and EU sanctions... and US made this govt. tow their line.

 

[janon]

Why did we stop in the first place ?

Pressure from Uncle Sam.

It's a win-win situation for India and Iran. Oil imports are the biggest burden on the economy, the main reason for our burgeoning current account deficit, and the depletion of our forex reserves. If we can pay for oil in Rupees instead of dolars or euros, that would mean that Iran would have to use those rupees to buy something from us (medicines, wheat etc have been the hot exports in the past). So in effect, we ensure that the money we pay for oil would be used to buy goods or services from us, thereby helping to ease the import-export ratio.

As for Iran, they will get a customer who is one of the biggest users of their product (oil), and with the rupees they earn, they can buy stuff from India that is hard for them to get due to the sanctions imposed on them. Indian pharmaceutical companies can help fill their dispensaries, which have been gloomily empty due to the sanctions.

Both countries are in a desperate situation, and both should bear that in mind.

On another note, I wish the GoI would end fuel subsidies. Petrol, diesel etc should be paid for fully by those who use them. Govt should not bear the burden of that. Ending subsidies for petroleum products would serve a dual purpose - to cut down govt spending and rein in the rampant inflation, and to persuade people to use only as much petroleum as they can afford (thereby reducing our oil import bill).

 

[Imran Khan]

Why did we stop in the first place ?

uncle SAM said that is why but now bhook pari hai to currency swap yaad aya hai

 

[Indo-guy]

US and EU sanctions... and US made this govt. tow their line.

We first committed blunder of voting against Iran under US pressure ....

Then under further US pressure we were forced to reduce our oil- imports from Iran

Now to go back to Iran ...especially after MV Desh-shanti ship detention drama ( which is yet to be resolved ) with what face we are going to ask for oil from Iran ?

 

[janon]

will it be so easy after demarche to ambassador of Iran for unconditional release of Indian ship ?

We have anyways have little options left besides to swallow our pride and fall in line ....

You have to remember that the Iranians are desperate as well, due to the tough sanctions on them. The very fact that they have decided to accept payment in rupees proves that. There are very few countries they can sell their goods to.

 

[Gandhi G in da house]

uncle SAM said that is why but now bhook pari hai to currency swap yaad aya hai

Uncle Sam's pressure has been there for a long time. We didn't budge earlier then why now suddenly ? There's something more to it.

 

[Indo-guy]

Pressure from Uncle Sam.

It's a win-win situation for India and Iran. Oil imports are the biggest burden on the economy, the main reason for our burgeoning current account deficit, and the depletion of our forex reserves. If we can pay for oil in Rupees instead of dolars or euros, that would mean that Iran would have to use those rupees to buy something from us (medicines, wheat etc have been the hot exports in the past). So in effect, we ensure that the money we pay for oil would be used to buy goods or services from us, thereby helping to ease the import-export ratio.

As for Iran, they will get a customer who is one of the biggest users of their product (oil), and with the rupees they earn, they can buy stuff from India that is hard for them to get due to the sanctions imposed on them. Indian pharmaceutical companies can help fill their dispensaries, which have been gloomily empty due to the sanctions.

Both countries are in a desperate situation, and both should bear that in mind.

On another note, I wish the GoI would end fuel subsidies. Petrol, diesel etc should be paid for fully by those who use them. Govt should not bear the burden of that. Ending subsidies for petroleum products would serve a dual purpose - to cut down govt spending and rein in the rampant inflation, and to persuade people to use only as much petroleum as they can afford (thereby reducing our oil import bill).

Correction ....flipside of getting over oil subsidies does not end up helping reigning inflation ...atleast in short term ...

That will actually entail letting go fuel prices be decided by International standards ...with falling ruppe and increasing import costs already there is clamour for diesel price hike ....that will drag inflation sharply upwards ....


But we have no choice ....we will have to bite this bullet !!!

We can't go on with state control of Oil prices ....with economy in such a deep mess !

 

[Edevelop]

Why is India changing its Oil partners constantly ? One day its Iran, Saudi Arabia and Iraq.

 

[janon]

Why is India changing its Oil partners constantly ? One day its Iran, Saudi Arabia and Iraq.

India has been buying from every one of them. It's not a marriage, that we have to be faithful to one partner.

 

[Indo-guy]

You have to remember that the Iranians are desperate as well, due to the tough sanctions on them. The very fact that they have decided to accept payment in rupees proves that. There are very few countries they can sell their goods to.

Indeed . Their economy is badly pinched with Economic sanctions ....but what they need is foreign exchange ...not Indian rupee. india can't fulfill their all needs ...but seems they also have little options left !!!

 

[janon]

Correction ....flipside of getting over oil subsidies does not end up helping reigning inflation ...atleast in short term ...

That will actually entail letting go fuel prices be decided by International standards ...with falling ruppe and increasing import costs already there is clamour for diesel price hike ....that will drag inflation sharply upwards ....


But we have no choice ....we will have to bite this bullet !!!

We can't go on with state control of Oil prices ....with economy in such a deep mess !

At least, end subsidies on private vehicles for a start. So that people who drive SUVs don't get their lifestyle subsidized by the taxpayer. Keep subsidizing public transport and trucks carrying essential items, for now.