“It is not banned and if a private firm has yuan to settle its trade, the government will not stop it, but it will neither encourage nor facilitate such trade,” said a ministry official.
Indian refiners buy most of their Russian oil from traders while making some direct purchases from Russian entities.
EXTRA CONVERSION COSTS
Refining sources said traders have been ready to strike deals in dirhams, but Russian sellers have held out for yuan.
Rosneft, Gazprom and Gazprom Neft did not reply to requests for comment.
State-run Indian Oil, the country’s top refiner, has used yuan and other currencies to pay for Russian oil, Reuters reported previously.
Other state refiners Bharat Petroleum Corp (BPCL) and Hindustan Petroleum (HPCL), which to date have not paid for oil in yuan, have also been asked by Russian suppliers to pay using Chinese currency, sources said.
Private Indian refiners have continued to pay in yuan and other currencies for Russian oil imports, sources said, with most Indian purchases of Russian oil paid in dirham.
Two refining sources said settlement in yuan increases their costs, as rupees first need to be converted to Hong Kong dollars and then yuan, a process that costs 2 per cent to 3 per cent more than settling in dirham.
“The rupee to yuan conversion adds an extra extra layer,” the refining source cited above said.
Indian Oil, BPCL, HPCL and the country’s oil and finance ministries did not immediately respond to Reuters’ requests for comments.
While Indian state refiners would prefer to use rupees to pay for Russian oil after the country’s central bank last year announced a mechanism to settle foreign trade in rupees, Russia is less keen to accept rupees given that the bilateral trade balance is tilted in Moscow’s favour.
However, in India, some people see using the yuan as benefiting China, when ties between the two neighbours remain strained after a border clash in 2020 in which 20 Indian soldiers and four Chinese troops were killed.
Source: CNA
