US sanctions may hit Reliance

The US Congress is moving a new and improved sanctions legislation on Iran this week, targeting foreign companies that supply refined petroleum products to Iran. Among several companies that have been named is Reliance Industries which is in India.

The Senate Foreign Relations Committee is expected to introduce a bill this week sponsored by Evan Bayh, Jon Kyl and Joe Lieberman to add to the sanctions against Iran. This bill is the Senate version of a bill introduced in the House of Representatives last week by Congressmen Brad Sherman, and seeks to replace the 1996 Iran sanctions act.

The new bill seeks to target foreign companies that sell refined petroleum products to Iran. In a statement on the legislation last week, Sherman and Kirk said nearly all of Iran’s imported gasoline was provided by four European companies —Swiss firm Vitol , Swiss/Dutch firm Trafigura , French firm Total and British Petroleum — and Indian firm Reliance.

In December 2008, Sherman had led a bi-partisan group of eight House members to pressure the US Exim Bank to suspend loan guarantees to Reliance. The bank had approved guarantees of $800 million for expansion of RIL’s Jamnagar facility.

In a letter to Exim Bank criticising it for lending to Reliance industries, Sherman said, “While we would normally strongly support this type of assistance to facilitate US exports to India, we are deeply concerned about the inadequate attention paid to other vital national interest in the approval of these guarantees.