Companies beef up security

Threat perception highest for refineries.

The brass of the country's largest company "" ONGC "" met the National Security Advisor about ten days ago to work out the modus operandi for beefing up security at its vital installations like Bombay High.

This was in response to a heightened threat perception, emphasised recently by Prime Minister Manmohan Singh.

Proactive steps were decided upon at the meet "which cannot be disclosed due to the sensitivity of the issue," ONGC Chairman RS Sharma said, adding that he saw no immediate need to hike insurance cover.

The story is pretty much the same for other critical oil installations, where access control has been tightened and security deployment increased. Essar Oil officials said security and intelligence teams were on patrol at their refinery that is under construction in Jamnagar.

The Bhabha Atomic Research Centre has been declared a military installation. There are some power utilities, however, that see the need to hike insurance cover and security, but are held back by the huge expense, which has to be "allowed" by the electricity regulator.

Insurance and security fall under the broad head of operations and maintenance (O&M) where overall expenditure is limited to about Rs 10 lakh per Mw by the regulator, which is considered inadequate by most companies.

The North Eastern Electric Power (Neepco) and the National Hydroelectric Power Grid Corporation are among the companies that sought and were granted additional expenditure on account of security in the North-East.

These applications are expected to rise, as is the quantum of waiver required. Take the case of Andhra's generation utility APGenco, which is paying about Rs 11 crore a year for limited insurance covering accidents and natural calamities.

"When it comes to 'force majeure' and any blasts caused by terrorist actions, premium will be very high, say Rs 500 crore for Rs 5,000 crore worth of assets," an APGenco official told Business Standard. This means that a terror cover would increase its insurance bill by about 100 times.

"We will undertake prudence checks and if the expenditure can be justified, we will allow it," said the chairman of the Central Electricity Regulatory Commission, Ashok Basu.

And this expense could well find its way to the average electricity bill, as will all the expenditure required to guard critical installations. APGenco is looking at options like electrified fences and closed circuit televisions (CCTVs) to guard its assets. Some refineries have already deployed CCTVs.

As far as the private sector goes, insurance companies have reported an increasing number of companies like Jindal Steel and Asian Paints opting for terror insurance (which is covered under the fire policy) as well as terror cover under group personal accident policies.