India to Pay $1.4 Billion of Iran's Claims

India plans to release $1.4 billion of Iran's frozen assets related to oil purchases. Reuters reported on Thursday, August 22, citing two unnamed sources, that Rajiv Mehirishi, India's Finance Minister, requested the country's refineries last month to pay Iran in two separate installments of $700 million each. Iran and six world powers reached a comprehensive nuclear agreement last month, and even before that, the Indian government was preparing to settle its oil debts to Iran. It is still unclear when these amounts will be paid. Mr. Mehirishi had visited Tehran last month at the head of an Indian delegation that included officials from the central bank and UCO Bank. Iran and India agreed that 55% of Iran's oil payment would be deposited in Iran's bank account at Halk Bank in Turkey through foreign currencies, while the remaining amount would be deposited in Iran's bank account at UCO Bank in India in rupees, to be used for purchasing Indian goods and imports. However, with the intensification of Western sanctions, particularly from the U.S., which targeted the transfer of Iran's oil money by its customers abroad, Turkey stopped the transfer of Iran's oil money in February 2013, and Indian refineries have not found an alternative method for their payments since then. Since the autumn of 2013, following the interim nuclear agreement, India has released part of Iran's frozen funds several times, but still owes Iran $6.5 billion. Additionally, according to Reuters, Iran has 170 billion rupees, equivalent to $2.62 billion, in UCO Bank in India. In past payments, India deposited released amounts into Iran's central bank account in the UAE through UAE dirhams, and Reuters states that this method will be used for settling the remaining debt. The four refineries—Mangalore, Essar, Indian Oil, and Hindustan Petroleum—collectively owe Iran $6.5 billion. On July 9, Reuters also reported that the Indian government had asked its refineries to provide euro and dollar currency resources to settle the $6.5 billion oil debt to Iran. Indian refineries have paid a total of $3 billion to Iran since the autumn of 2013, and the Indian government has requested these refineries to gradually convert their rupees to dollars and euros to avoid currency liquidity shortages in the country. Earlier this week, the World Bank reported that Iran is expected to have a total of $107 billion in frozen assets (including LCs, oil export money, etc.), of which $29 billion will be immediately released with the implementation of the nuclear agreement. However, Iranian officials have recently provided conflicting statistics regarding the amount of Iran's frozen assets abroad.