Wed Sep 18 11:53:12 UTC 2024: ## Indian Oil Companies Stuck with Millions in Dividends from Russian Investments

**New Delhi, India** – Indian public sector oil companies are facing a major headache as over $900 million in dividend income from their Russian investments remains trapped in Moscow due to payment channel restrictions stemming from the Ukraine war.

The dividend payments, received by ONGC Videsh (OVL), Oil India (OIL), Indian Oil Corporation (IOC), and Bharat Petroleum Corporation (BPCL), are stuck in roubles in their bank accounts. The companies have been unable to repatriate the funds or use them for bilateral trade between India and Russia, despite repeated discussions with their Russian partners and the Indian government.

The issue has been complicated by Western sanctions imposed on Russia and its energy sector, limiting the options for the Indian companies. While using the funds for payments in Russia, increasing investments, or funding operational expenses are possibilities, there are currently no plans for further capital investment in existing projects or exploring new projects in the country.

OVL, which holds a stake in the Sakhalin-1 project, requires around $600 million to regain its share following the project’s nationalization by Moscow. The company is attempting to use its trapped dividend income to partly settle this payment.

Theoretically, the funds could be used for India’s crude oil purchases from Russia. However, this poses multiple challenges. OIL does not purchase Russian oil, and the investments are made through special purpose vehicles registered overseas, potentially subjecting the payments to international jurisdiction. Additionally, cross-payments for Russian oil using the dividend income would create complex taxation and accounting challenges.

India’s reliance on Russian oil has increased significantly since the Ukraine war, with Russian crude becoming a key source for Indian refiners. However, the payment channel restrictions imposed by Western sanctions have hampered the flow of funds.

The Indian companies are currently seeking guidance from legal and international accounting experts to find a solution for their trapped dividend income. The situation highlights the challenges faced by businesses operating in a globalized environment during times of geopolitical upheaval.

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