Debt repayment is order of the day
Debt repayment is in vogue as India repays oil debts to Iran and Ghana offsets its loan from China with oil.
According to officials, two thirds of a $4.8bn debt owed by Indian purchasers of Iranian oil have now be repaid. The repayments have been made despite economic sanctions being placed on Iran by the US and Europe, although the purchase of Iranian crude oil is not itself banned internationally.
Despite earlier attempts to repay the debts, via a German-based bank, after the Reserve Bank of India scrapped its clearing house system at the end of 2010, the payments have only recently started to arrive in Iran's coffers. The conduit appears to be through the Turkish banking system according to reports. It is alleged that South Korea and China could owe as much as $35bn in sanction-witheld payments, although Iranian officials deny the claim.
Meanwhile, Ghana is set to repay a $3bn loan to China using a combination of oil sales direct to China as well as other revenues. The money has been borrowed by the African nation to fund infrastructure projects and boost the economy through oil and gas-based activities.
As well as payment in kind, based on a six-month Libor plus 2.95% interest rate over 10 and 15 years repayment, the Ghanain government has agreed that at least 60% of any China-funded contract work would be awarded to Chinese companies.
With Ghana keen to maximise, but carefully manage, its newly-established oil economy, oil exports to China under the loan agreement would be through commercial contract.
