Iran to get 2nd tranche of oil payment

Iran will soon receive a second installment of previously frozen assets that are being returned under an interim nuclear agreement with world powers, the official IRNA News Agency quoted Iran's central bank chief as saying.

The official, Valiollah Seif, said on Wednesday that the new funds would be transferred to Iran's account "in the next three days", but did not state the amount.

Under a Nov 24 accord reached in Geneva, Iran is to scale back its nuclear activities for six months in exchange for sanctions relief from six major powers: Britain, China, France, Germany, Russia and the United States.

Iran agreed to suspend enrichment of uranium to 20 percent fissile concentration - a relatively short technical step away from the level required for nuclear bombs - and is taking action to neutralize its holding of the material.

In return, it is gradually winning back access to $4.2 billion of its oil revenues frozen abroad, along with some other sanctions relief.

The funds will be paid out in eight transfers on a schedule that started with a $550 million payment by Japan on Feb 1.

Last month, banking sources said South Korea was set to make two payments in March totaling $1 billion.

The International Atomic Energy Agency has a pivotal role in checking that Iran is living up to its part of the accord. Its head, Yukiya Amano, indicated on Monday that Iran had made sufficient progress to receive a scheduled March 1 installment of $450 million. A third payment of $550 million is due on March 7.

The nuclear agreement aims to give the two sides six months to reach a comprehensive deal to address all questions about whether Iran seeks nuclear arms.

Iran denies any such intention, saying its program is for solely peaceful purposes such as generating electricity and producing medical isotopes.

South Korea will transfer $550 million to Iran in its first payment, sources with direct knowledge of the matter said on Thursday.

The payment on Friday will come after Japan cleared some of its dues as the IAEA said Iran is reducing its most proliferation-prone nuclear stockpile as required under the landmark deal.

"The oil import payment will be made tomorrow," a source with direct knowledge of South Korea's payment said by phone.

"How the money will be exchanged will be further discussed with Iran," the source said.

The tough sanctions imposed on the OPEC member in 2012 had closed the option for buyers of Iran's crude to transfer money to settle their oil payments, putting a stranglehold on the nation's revenues and crippling its economy.

The Iranian central bank held up to $5.6 billion in two accounts at Woori Bank and Industrial Bank of Korea, both state-owned, as of late 2013, according to a source last month.

Another source said: "It is likely that Woori will transfer the money to Iran after receiving some from IBK."

Woori and IBK spokesmen declined to comment on the money transfer. Bank of Korea and South Korean Finance Ministry officials also declined to comment.

Until the interim deal, Iran's importers were required to steadily reduce purchases to qualify every six months for a waiver from US sanctions.

(China Daily 03/07/2014 page11)