Indian refiners are preparing to deposit $700m with the United Commercial Bank to transfer the first installment of oil payments owed to Iran, informed sources told Reuters.
This is ahead of the expected lifting of sanctions against Tehran, following the landmark nuclear deal in July.
The companies in question, Essar Oil, Mangalore Refinery and Petrochemicals, Indian Oil Corp, Hindustan Petroleum Corp and HPCL Mittal Energy, together owe more than $6.6b.
Sanctions have gradually worn away at Indian purchases of Iranian crude, the second highest after China, with payments due to Iran being effectively blocked in 2013.
Press TV quoted India’s Finance Secretary, Rajiv Mehrishi, previously as saying that these delayed payments in a combination of dollars, or euros, and Indian rupees.
“It will obviously be partly in dollars, partly in rupee. It could be euro also. Partly hard currency, partly rupee. Exact division is yet to be decided,” Mehrishi said. “It is being worked out.”
The Indian companies have already deposited 45% of their oil payments in a rupee-denominated account at United Commercial Bank.
Iran is allowed to use this money to buy commodities not covered by sanctions, such as food and medicine.