Fresh model to pay for Iran oil

The government will crystallise the contours of the new settlement mechanism at a high level meeting on Friday.

Representatives of the RBI,the ministries of finance,commerce,petroleum,external affairs and officials from the State Bank of India will attend the meeting.

Although crude imports may not be affected under the proposed system,India cannot deal with any Iranian entity that faces a US sanction. There are many Iranian entities which are banned by the US. We are only interested in oil which is permissible under this mechanism,the official said. The new payment mode is expected to be a transparent one.

Lack of adequate refining capacity is a major weakness for Iran,which imports finished fuel for its domestic requirement. Some Indian companies had plans to set up refineries in Iran,but they withdrew from the project due to US disapproval.