NEW DELHI (AP) — India will get control of six ships following a decision to dismantle a joint Iranian-Indian shipping company hit by Western sanctions on Iran, a government official said Thursday.
The Irano Hind Shipping Company was finding it difficult to get customers or insurance for its ships because of the sanctions. Last week, the Indian government agreed to close down the 39-year-old joint venture.
The state-owned Shipping Corporation of India will take over six of the seven vessels belonging to Irano Hind, the official said. In return, SCI will take on the liability of repaying the joint company's debt, estimated at around $88 million.
The official spoke on condition of anonymity because he was not authorized to speak to the media.
Western countries have imposed sanctions on Iran to deter it from pursuing a nuclear weapons program. Iran insists its nuclear program is for peaceful purposes.
India is one of the main targets of U.S. attempts to chip away at Iran's critical commercial lifelines across Asia.
The Irano Hind Shipping Company was set up before Iran's 1979 Islamic Revolution as a joint venture between the Shipping Corporation of India and the Islamic Republic of Iran Shipping Lines. The IRISL held a 51 percent stake in the company, while SCI had the remaining 49 percent.
The company's ships were mainly used to transport Iranian crude to Indian refineries. The company suspended its operations last year after the Western sanctions kicked in.
The official said the company found the going tough because the IRISL figured on the list of sanctioned entities. There were no takers to hire the ships, and sources for insurance and finance dried up.
The Shipping Corporation of India will buy four of the vessels at market value, and get two others at a slightly reduced price. SCI will be allowed to deploy all of the ships using the Indian flag, the official said.
Meanwhile, India's imports of Iranian crude have been steadily declining as New Delhi explores alternative oil sources since the U.S. and European sanctions came into effect, a petroleum ministry official said.
Energy-starved India imports around 75 percent of its oil to power its economic growth.
Indian officials say crude oil imports from Iran have fallen from 10.5 percent in 2010 to around 7 percent in 2012.
India's junior minister for petroleum, Panabakka Lakshmi, told Parliament last month that Saudi Arabia was India's main supplier of crude oil, followed by Iraq, Venezuela, Kuwait, the United Arab Emirates and Nigeria. Iran was seventh, down from its earlier position as India's third-largest supplier of crude oil in 2011.