Govt floats Rs 2k cr pool to cover Iran oil - Times of India

The author has posted comments on this articleSanjay Dutta, TNN | Apr 4, 2013, 12.50AM IST NEW DELHI: The government is setting up an Indian Energy Insurance Pool, a fund to provide insurance to domestic refineries that have been refused cover by European re-insurers for processing Iranian crude, with a corpus of Rs 2,000 crore. The government will also provide sovereign guarantee for losses up to Rs 10,000 crore. According to decisions taken at a meeting called by national security advisor Shivshankar Menon last month, the oil ministry and the Oil Industry Development Board (OIDB) — a body under its wings — would jointly commit Rs 1,000 crore. All the public sector general insurance companies will together provide a matching capacity of Rs 1,000 crore. Private sector general insurance companies could voluntarily chip in with additional cover capacity, with matching commitment from the ministry and OIDB. A taskforce has been set up under the Insurance Regulatory Development Authority member (non-life) to organize and get the insurance pool off the ground. Sources said the taskforce, during its first meeting held on March 18, suggested that the government shall provide sovereign guarantee for losses in excess of Rs 2,000 crore, which may go up to Rs 10,000 crore. This is expected to create additional capacity and comfort level for the insurance pool. The pool would help all refineries importing crude oil from Iran, particularly Mangalore Refinery & Petrochemicals, whose current insurance cover is coming to an end in May and has so far not found any insurer willing to hedge its risks. The government on Monday scrapped the shipping joint venture with Iran, which was set up to transport Iranian crude due to similar insurance problems. Petroleum secretary Vivek Rae had on March 24 indicated the move to create the fund but said the size or whether it would be enough to cover the re-insurance risks were yet to be worked out. The problem has arisen since under the US and the European Union (EU) sanctions, global insurers have added a "sanctions clause" in their contract that limits the amount to be paid in case of a claim. That is why domestic insurance companies have refused cover to refineries processing Iranian oil as they could not get reinsurance from their European counterparts. Reinsurance makes up for 90% of the insurance cover. via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNHF88mKp5S8sJNIxP5a11sxkmTtPw&url=http://timesofindia.indiatimes.com/business/india-business/Govt-floats-Rs-2k-cr-pool-to-cover-Iran-oil/articleshow/19369543.cms

Put the internet to work for you. via Personal Recipe 2910127