NEW DELHI: India’s state-run
companies are examining the option of utilising about $600 million dividend income from investments in Russia to buy Russian oil as they are unable bring the money home due to western banking curbs on Moscow. “We are examining legal and financial implications of options to utilise the stranded money. We are mindful of the sanctions and do not want to do anything that may in any way amount to a breach,” one official in the know said on Thursday.
One of the options on the table is to loan the money lying in Russian bank accounts to entities buying oil. These entities could repay the loan in India. IndianOil and Bharat Petroleum, both public sector refiner-fuel retailers, are among the largest Indian buyers of Russian crude.
The loan option aims to capitalise on Russia becoming India’s top oil supplier after the Ukraine conflict. Indian refiners began lapping up Russian crude at discounts as the sanctions made those barrels too hot to handle for US and European buyers.
IndianOil, a Bharat Petroleum subsidiary, Oil India and ONGC Videsh have invested nearly $5.5 billion in buying 49.9% stake in Vankor and another 29.9% in Tas-Yuryakh fields in Siberia. In addition, ONGC Videsh also has 20% stake in Sakhalin-I project, which it had acquired in 2001.
None of these companies have been able to repatriate to India dividends on profits from those investments since the Ukraine conflict. The money is lying on their accounts in Russia. Initially, the thinking was to use the money for meeting local expenses and cash calls. But with the amount rising as the conflict drags on, they are now looking at other options.
Russia was removed from SWIFT, the platform for settling international banking transactions, after Moscow sent troops into Ukraine in February 2022. Moscow in turn put restrictions on dollar repatriation from Russia to check volatility Rouble exchange rates.