Govt plans Energy Insurance Pool for Iranian crude refiners

New Delhi: The government is considering setting up an Indian Energy Insurance Pool (IEIP) to provide insurance cover to domestic refineries that process crude oil imported from Iran, Parliament was informed today.

“Keeping in view the strategic geo-political relations and the need to have an uninterrupted import of crude oil from Iran, Government is exploring the possibility of setting of an IEIP as one of the options,” Minister of State for Finance Namo Narain Meena said in a written reply in the Lok Sabha.[caption id=“attachment_731129” align=“alignleft” width=“380”] Minister of State for Finance Namo Narain Meena. PTI [/caption]

A task force has been constituted to finalise the terms of reference for operationalising the energy pool.

“The possibility of setting up of the IEIP is being discussed with all stake holders and a decision will be firmed up soon,” Meena added.

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As a consequence to the unilateral economic sanctions by US and the European Union on Iran, the provisions of services related to insurance or reinsurance of crude oil cargoes originating from Iran were impacted, he said.

Insurance companies in India have refused to provide cover to refineries processing Iranian oil as they could not get reinsurance from their European counterparts.

Reinsurance makes up for 90 percent of the insurance cover provided.

At present, Indian general insurers provide cover to oil refiners and then re-insure the risk with global re-insurers. But under the US and EU sanctions, the global insurers provide re-insurance with “sanction clause”, which limits the amount to be paid in case a claim arises.

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India has slashed import of crude oil from Iran by over 26.5 percent in the financial year ended 31 March.

The nation imported about 13.3 million tonnes of crude oil from Iran in 2012-13 fiscal, down from 18.1 million tonnes shipped in the previous financial year.

PTI