India says no solution on Iran oil payment issue

(NEW DELHI) - India said Wednesday it is yet to resolve a crude oil payment problem with Iran after the South Asian nation's central bank halted payments through a financial clearing house.

In December, India's central bank said payments to Iran -- India's second biggest supplier of crude -- could no longer be settled through a long-standing clearing house system due to sanctions.

"(Crude) supplies are continuing. A final solution has not been found yet," to the payment issue, India's Oil Secretary S. Sundareshan told reporters in New Delhi.

When asked for a timeline within which the issue might be resolved, the secretary said, "Maybe in the next few days."

The United States has said it believes Tehran has been using the financial clearing house -- the Asian Clearing Union (ACU) -- to evade international sanctions.

The abrupt move to block the ACU mechanism, which was run by the central banks of India and other South Asian countries, left Indian oil companies without a way to pay for their supplies.

India imports around 80 percent of its crude oil needs.

A temporary arrangement has been found using the State Bank of India and the European-Iranian Trade Bank, or EIH Bank, but both countries are seeking a long-term solution.

India's biggest oil refiner IndianOil has said it did not expect any supply shortages because of the payments problem, but other Indian refiners have said they were making contingencies in case of disruption.

In June, the United Nations approved a fourth round of sanctions against Iran over its disputed nuclear programme, while the United States and the European Union imposed additional restrictions.

Indian officials were working on a specific routing of funds to Iran for the payment of crude imports, Sundareshan said last month.

Iran has reportedly told India that it would be prepared to accept future payments in rupees.

(Dow Jones Newswires contributed to this report)