UCO Bank Secures Nod to Partner with Nayara
Indian lender UCO Bank got government permission to pay trade-related transactions of Nayara Energy Ltd. so that the refiner can proceed with its operations. As previously noted, almost two months after the refiner was slapped with EU sanctions, and then ostracized by major financial institutions.
The executives of the mid-sized state-owned lender are currently meeting with senior officials of the finance ministry, the people said, but they asked to remain unnamed because they are not to be disclosed. They were requested to lead in implementing the payments on behalf of Nayara that is partially owned by the Russian oil giant, Rosneft PJSC.
The people said that operational details, such as selection of currency are being discussed.
Email requests asking to comment were not immediately responded to by Nayara, UCO bank and the finance ministry.
Nayara had approached government officials last month for help brokering a relationship with a domestic lender with a limited offshore presence in order to support wire payments for crude oil imports and to help it receive payments for refined fuel product exports. UCO Bank, which has in the past facilitated oil trades with Iran, was mentioned then as a potential candidate.
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Nayara has separately sought government help in securing vessels to transport products locally, after domestic shipowners stopped working with the company.
The refiner was sanctioned by the European Union in July. Since being blacklisted, Nayara has sought advance payment or letters of credit even before its fuel shipments are loaded, and has cut run rates at its operation. Ships have diverted away from its terminal.
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Large institutions in India and elsewhere typically react to Western sanctions with extreme caution, fearing reprisals that could ultimately jeopardize access to the global financial system. State Bank of India, the country’s largest state-run lender, is among those that have stopped processing trade and foreign currency transactions for Nayara Energy.
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Rosneft owns just over 49 percent of Nayara, which accounts for nearly eight percent of India’s refining capacity and seven percent of its retail-fuel network.