Iran is unlikely to carry out the threat of stopping supplies to India as the UN-sanctioned regime led by president Mahmoud Ahmadinejad can ill-afford to lose its second-biggest crude buyer after China, accounting for about 20% of its exports
New Delhi: More than six months after a Reserve Bank of India (RBI) order threw out a mechanism to pay for Iranian oil, petroleum minister S Jaipal Reddy today said India is trying to ensure uninterrupted supplies of crude from the Persian Gulf nation, reports PTI.
"There is a problem (about payments through an alternate mechanism)," Mr Reddy told reporters here. "We are sorting it out. We are optimistic about finding a solution and ensuring uninterrupted supplies."
Iran's Fars news agency had on Sunday quoted National Iranian Oil Co (NIOC) managing director Ahmad Ghalebani as saying that Tehran had "seriously warned the Indian side of the possibility to halt oil exports if a solution is not found to clear its arrears".
NIOC had on 27th June written to refiners like Mangalore Refinery and Petrochemicals (MRPL) and Essar Oil, who are the principal buyers of Iranian crude, demanding that a mechanism be put in place to pay for its oil supplies, failing which supplies will be stopped from August.
Mr Reddy said alternate to a scrapped long-standing mechanism to payments for import from the Persian Gulf nation using a clearing house system run by regional central banks, was in the process of being worked out. He did not elaborate.
Officials in his ministry said alternate mechanism was 'days away' from finalisation. The payments will be in Euro but needed approval of the finance ministry.
Iran is, however, unlikely to carry out the threat of stopping supplies to India as the UN-sanctioned regime led by president Mahmoud Ahmadinejad can ill-afford to lose its second-biggest crude buyer after China, accounting for about 20% of its exports.
Without India, Iran will be left with just China and Korea as buyers, officials said.
Iran is supplying some 400,000 barrels per day (bpd) of crude to India on credit since late December 2010 when RBI scrapped the Asian Clearing Union (ACU). Outstanding payments have now topped $6 billion.
Iran is India's second largest oil supplier, accounting for 12% of its needs.
Officials said the only option left with India was to pay in its own currency, rupee.
Korea and China use their own currency to pay for Iranian imports. Iran buys cars and several other commodities, including heavy equipment, from the two nations from the payments it earns from oil sales, leaving almost nothing by way of actual currency transfer.
MRPL, a unit of state explorer Oil and Natural Gas Corporation, is the largest buyer of Iranian crude at 142,000 bpd. Essar imports 110,000 bpd, state-owned Hindustan Petroleum Corp 65,000 bpd and Indian Oil Corporation 50,000 bpd.
The Karvy Group and Computershare have entered a definitive agreement with Bahrain based KPMG Fakhro to acquire a majority stake in its affiliate, Bahrain Shares Registering Company WLL.
The Karvy Group and Computershare, through their securities registry joint venture Karvy Computershare Pvt Ltd, have entered a definitive agreement with Bahrain based KPMG Fakhro to acquire a majority stake in its affiliate, Bahrain Shares Registering Company WLL (BSRC). The acquisition is part of Karvy Computershare's Middle East expansion strategy enabling the extension of its investor services.
Karvy Computershare Pvt Ltd (KCPL) provides registrar services to mutual funds and corporates across India. Currently, KCPL services over 67 million investors, across 500 corporate and 29 mutual funds from nearly 500 locations, making it clearly the largest investor servicing entity in India. Karvy Computershare is a 50:50 joint venture between Karvy from India and the Australia based global registry leader, Computershare.
Currency growth drops to 15.8% in June, from the peak of 21% in August last year
Growth of currency in circulation in the country has slowed down to its lowest in about a year, the outcome of the slowdown in economic activity and partly the higher real deposit rates over the past couple of months.
According to a study by Nomura Financial Advisory and Securities (India), the growth of currency in circulation (CIC) came down to 15.8% year-on-year in June 2011, after falling steadily since August last year when it was at a peak of 21.2%.
"In our view," Nomura says, "the sharp fall in CIC this year is partly due to high real deposit interest rates prompting a shift away from cash to deposits. However, we believe the slowdown in economic activity and a moderation of asset prices are more important reasons as they have likely reduced transaction demand for money."
The causes for the fall in CIC are in contrast to the reasons that saw high growth last year, when price rise was a major factor. "High inflation, strong growth, low bank deposit rates and rising asset prices were cyclical factors driving increased public demand for cash from transaction and portfolio balance motives (last year)," Nomura said.
The report also mentioned that cash payments made to people in rural India, under various rural employment guarantee schemes, also contributed to the growth of CIC last year. "A structural driver was cash payments made to rural households (most of which do not bank) under the rural employment guarantee scheme."
Currently, the economic slowdown, which has reduced transaction demand, and the rise in real deposit interest rates, which is encouraging a shift of cash to deposits, are the main reasons for the fall in CIC.
Major industry sectors such as steel, cement, oil & gas and fertilisers have seen slower growth over the past few months, mainly due to sluggish demand and rising inputs costs. (Read, "Slowdown spreading across all core sectors in India") This is the newest concern for the government which is already under pressure on account of uncontrolled inflation, besides the series of scandals that appear to have seriously dented its credibility.