India merchants almost halt exports to Iran as its rupee reserves fall

“Exporters are avoiding dealing with Iran since payments are getting delayed for months,” said a Mumbai-based dealer with a global trading house. (File/AFP)
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Updated 04 March 2021

India merchants almost halt exports to Iran as its rupee reserves fall

  • Under US sanctions, Tehran is unable to use US dollars to transact oil sales
  • The Islamic Republic was buying mainly basmati rice, tea, sugar, soymeal and medicines from India

MUMBAI/ DUBAI: Indian merchants have almost entirely stopped signing new export contracts with Iranian buyers for commodities such as rice, sugar and tea, due to caution about Tehran’s dwindling rupee reserves with Indian banks, six industry officials told Reuters.
“Exporters are avoiding dealing with Iran since payments are getting delayed for months,” said a Mumbai-based dealer with a global trading house.
Iran’s rupee reserves in India’s UCO and IDBI Bank , the two lenders authorized to facilitate rupee trade, have depleted significantly and exporters are not sure whether they would be paid on time for new shipments, the dealer said.
Under US sanctions, Tehran is unable to use US dollars to transact oil sales.
Iran previously had a deal to sell oil to India in exchange for rupees, which it used to import critical goods, including agricultural commodities, but New Delhi stopped buying Tehran’s oil in May 2019 after a US sanctions waiver expired.
Tehran continued using its rupees to buy goods from India, but after 22 months of no crude sales, Iran’s rupee reserves have fallen, said the sources, who asked not to be named, citing business privacy.
Iran’s reserves have reduced significantly and “will be over soon probably because trade has stopped,” said a senior official with IDBI Bank.
The Islamic Republic was buying mainly basmati rice, tea, sugar, soymeal and medicines from India.
“Rice exporters are concerned about the current payment mechanism,” said Vijay Setia, a rice exporter and former president of the All India Rice Exporters’ Association (AIREA).
“There was too much of delay in payments from last year’s shipments. Exporters received payments six months after shipments,” Setia said.
In the first quarter of 2020 Iran imported nearly 700,000 tons of basmati rice from India, but in the same period this year shipments would be “very negligible,” Setia said.
Last year, Iran was the biggest buyer of India’s basmati rice and sugar. Iran fulfils more than one-third of its sugar and rice demand through imports, traders estimate.
Iran’s trade ministry and Central Bank of Iran declined to comment on the matter.
“We are in talks with Indian government and Indian traders to resolve these payment issues and I believe it will be resolved soon,” said a senior Iranian official, who asked not to be named due to the sensitivity of the matter.
“The delay in payments are due to US sanctions on Iran’s financial system that has made such payments very difficult,” he said.
As rupee reserves have depleted and dollar trade is not allowed, sugar exporters are exploring options to conduct trade in euros, Rahil Shaikh, managing director of MEIR Commodities India, said.
Sugar exporters are focusing on other destinations like Indonesia and Sri Lanka, as Iran is unlikely to buy significant quantities this year, said Shaikh.
India’s overall exports to Tehran fell 42% in 2020 from a year ago to $2.2 billion, the lowest in over a decade, said an official with India’s Ministry of Commerce and Industry.
The fall is continuing in 2021 and in January this year exports more than halved from a year ago to $100.20 million, the official said.
India’s ministry of commerce and industry did not immediately respond to a request for comment.
Trading houses and exporters were hoping new US President Joe Biden could reverse sanctions imposed by his predecessor Donald Trump on the oil-rich country.
“Exports would rebound even if Biden administration provides a few concessions to Iran like allowing oil trade in rupees,” said a Mumbai-based dealer with a global trading firm.


Egypt to implement eighth increase in household electricity prices in July

Updated 1 min 33 sec ago

Egypt to implement eighth increase in household electricity prices in July

RIYADH: Egypt’s Ministry of Electricity and Renewable Energy is preparing to the eighth increase in electricity prices for domestic consumption since it began phasing out subsidies in 2014.

From July 1, prices will increase between 8 percent and 26 percent, depending on the consumption segment, Minister of Electricity Mohamed Shaker said in an interview on Al-Balad TV.

In 2014, a decision was taken to eliminate state subsidies within five years, which was subsequently extended earlier this month to eight years to reduce the burden on customers and will now end in the fiscal year 2024/5, he said.

“When the economic reform took place in 2016, the dollar exchange rate changed dramatically, jumping from 7 Egyptian pounds to 18 Egyptian pounds, and this turned the scales completely,” said Shaker.

Fuel affects the cost of electric power the most, and whenever the dollar exchange rate changes, the fuel prices change, he said.

Agreement in principle reached over Suez Canal ship

Updated 18 min 44 sec ago

Agreement in principle reached over Suez Canal ship

  • Ship has been anchored in a lake between two stretches of the canal
  • Owners have disputed the claim and the ship's detention

CAIRO:  A representative for the owners and insurers of a giant cargo ship that blocked the Suez Canal in March on Wednesday said that an agreement in principle had been reached in a compensation dispute with the canal authority. Work was under way to finalize a signed settlement agreement as soon as possible and arrangements for the release of the Ever Given vessel would be made after formalities had been dealt with, Faz Peermohamed of Stann Marine said in a statement.
The Ever Given container ship has been anchored in a lake between two stretches of the canal since it was dislodged on March 29. It had been grounded across the canal for six days, blocking hundreds of ships and disrupting global trade.
The Suez Canal Authority (SCA) demanded $916 million in compensation to cover salvage efforts, reputational damage and lost revenue before publicly lowering the request to $550 million.
The Ever Given's Japanese owners, Shoei Kisen, and its insurers have disputed the claim and the ship's detention under an Egyptian court order.
SCA lawyer Khaled Abu Bakr on Sunday told a court hearing over the ship's detention that the vessel's owners had presented a new compensation offer and negotiations were ongoing.


IMF secures pledges worth $1.42bn for Sudan debt relief

Updated 56 min 14 sec ago

IMF secures pledges worth $1.42bn for Sudan debt relief

  • The pledges will clear Sudan's debts with the IMF
  • Sudan received debt relief from the Paris Club group of creditors in May

WASHINGTON: The International Monetary Fund (IMF) has secured sufficient pledges to clear Sudan’s debt with the lender after 101 member countries promised 992 million Special Drawing Rights (SDR), equivalent to $1.42 billion.

“Today’s financing milestone marks a historic opportunity for Sudan to move toward comprehensive debt relief from the IMF and the international community,” Managing Director Kristalina Georgieva said in a statement on Tuesday. “The Fund will continue to support Sudan in its recovery from a long period of instability and economic hardship.”

Sudan’s total external debt amounted to $50 billion at the end of 2019, according to the IMF. The country is still working with its creditors to reconcile its debt up to the end of last year, and officials say the final total could be as high as $60 billion, Reuters reported last month.

Sudan owes the Paris Club creditors group about $19 billion, mainly to France, Austria and the US.

In May, several countries agreed to write off Sudan’s debts during the Paris Conference to support Sudan, including $5 billion from France, which also approved a loan of $1.5 billion.


Oil hits more than two-year high on US inventories

Updated 23 June 2021

Oil hits more than two-year high on US inventories

  • “The uptrend is regaining momentum,” said Stephen Brennock at oil broker PVM

LONDON: Oil rose above $75 a barrel on Wednesday, reaching its highest since late 2018, after an industry report on US crude inventories reinforced views of a tightening market as travel picks up in Europe and North America.
The American Petroleum Institute reported that crude stocks fell by a bigger than expected 7.2 million barrels, two market sources said. Official inventory figures from the Energy Information Administration are due at 1430 GMT.
Brent crude rose 81 cents, or 1.1 percent, to $75.62 by 0824, having touched its highest since October 2018 at $75.64. US West Texas Intermediate added 49 cents, or 0.7 percent, to $73.34 and is close to its highest since October 2018.
“The uptrend is regaining momentum,” said Stephen Brennock at oil broker PVM. “Overnight, the API set a bullish backdrop.”
Brent has gained more than 45 percent this year, supported by supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and as easing coronavirus restrictions boost demand. Some oil industry executives are even talking of crude returning to $100.
“Underlying demand in the physical market means that any corrections lower will remain shallow and short,” said Jeffrey Halley, analyst at brokerage OANDA.
OPEC and allies, collectively known as OPEC+, meet on July 1. They have been discussing a further unwinding of last year’s record output cuts from August but no decision has been made on exact volumes, two OPEC+ sources said on Tuesday.
Global demand is set to rise further in the second half of the year, though OPEC+ also faces the prospect of rising Iranian supply.
A retreat in the US dollar has also helped to prop up oil, making crude less expensive for holders of other currencies.

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Dubai’s Meydan to hold talks on $2.6bn debt restructure plan

Updated 23 June 2021

Dubai’s Meydan to hold talks on $2.6bn debt restructure plan

  • PwC has been appointed to work on a proposal
  • Meydan's total debts amount to about $4 billion

RIYADH: Dubai developer Meydan will meet its creditors next week to discuss a $2.6 billion debt restructuring plan, Bloomberg reported citing people familiar with the matter.

PricewaterhouseCoopers (PwC) has been working with the company to put together a proposal, the people said, asking not to be identified for information confidentiality.

Meydan’s total debt amounts to about $4 billion, of which $2.6 billion needs to be restructured, the people said.

Under the plan, the company will ask creditors to extend repayments on that amount for an expected period of 8 to 10 years, they said.

The company also intends to sell assets to raise fresh funds, they added.

Spokespeople for PwC and Meydan declined to comment.