Oil Industry Development Board to contribute to the fund
The Government has decided that the Rs. 2,000 crore insurance fund, which would cover oil imports from Iran, would be managed by General Insurance Company (GIC) and would have contributions from both insurance and oil industry companies.
Officials in the Petroleum and Natural Gas Ministry said that a decision had already been taken to create an insurance fund that would allow refiners to import crude oil from Iran, which have been on the decline during the past one year due to U.S. and EU sanctions. Oil imports from Iran were hit by uncertainty after insurance companies refused to cover shipments as they could not get reinsurance from their European counterparts. Reinsurance makes up for 90 per cent of the insurance cover provided. The contributions to the fund will be done by the insurance companies and Oil Industry Development Board (OIDB) under the Petroleum Ministry. The move to form the insurance fund should come as a relief to Indian refiners, especially Mangalore Refinery and Petrochemicals Limited (MRPL), whose current insurance cover is coming to an end in May. It has so far not found any insurer willing to cover risks.
Following U.S. and EU pressure and uncertainty over the implications of the sanctions imposed by them, India reduced Iranian crude purchases to less than 13 million tonnes in the previous financial year from 18.1 million tonnes in the year before that.
The U.S., last December, renewed a waiver for India and eight other nations from a law that cuts institutions off from its banking system if they process payments for Iranian oil.