Baku, Azerbaijan, Nov.29
By Fatih Karimov - Trend:
Importing steel from India will deliver a 'death blow' to Iran's steel industry, a member of the association of Iranian steel producers said.
Reza Shahrestani added that importing steel from India in exchange for Iran's blocked petrodollars will not be beneficial for the country at all, Iran's Fars news agency reported on November 29.
India's Essar Group is looking to tap frozen Iranian oil revenues to pay for its steel exports to Tehran, in a novel attempt to work around Western financial sanctions against the OPEC member state, Reuters reported.
According to industry and government sources, and letters reviewed by Reuters, Essar has asked the Indian government to free it from paying its share of oil dues to Iran, and instead offset them against a $2.5 billion deal to supply steel plate to a National Iranian Oil Company affiliate.
At present, the international steel market is not in a good condition, and Indian companies are planning to reap benefits through exporting steel to Iran, Shahrestani said.
At a Nov. 3 meeting at India's oil ministry agreement was reached in principle on the deal, subject to final government approval, oil ministry sources said.
Essar Oil said it imported oil from Iran in its normal course of business and paid for it in line with an agreement between Iran and India. Essar Steel India Ltd exports steel plate to Iran through the State Trading Corporation of India (STC).
The transaction could become a test case for the 'smart' sanctions imposed from 2012 by the United States and the European Union to increase pressure on Tehran to comply in the nuclear talks. India is not a party to these measures, but does back United Nations sanctions intended to prevent Iran from acquiring nuclear equipment and materials.