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“If we are unable to secure the cover, then imports from Iran would have to be stopped. Our re-insurance date is on May. Till now, we haven’t received any assurance from the insurers. We have requested the government to sort out the issue as soon as possible,” said P P Upadhya, managing director of Mangalore Refinery and Petrochemicals Ltd (MRPL).
Companies were also finding it difficult to secure insurance for shipments from Iran.
Meanwhile, insurers have said that they have not refused cover for shipments. “We have informed the companies that Rs 250 crore cover, each, to the shipments getting crude from Iran,” said G Srinivasan, chairman and managing director, New India Assurance.
He added that this will be given from their own capacity, by all the four PSU general insurers combined with General Insurance Corporation of India.
"The Rs 250 crore cover includes, shipment and P&I cover. Presently, refineries are adequately covered. When they come for renewals, we will take a call," said the chief executive of a PSU general insurer. According to a senior official of a PSU general insurance firm, Chennai Petroleum has a cover of Rs 150-200 crore on the refinery provided by 4 PSU general insurers and GIC.
For insurers, the major concern is that following the sanctions, the will not be able to reinsure in the European markets to hedge their risks. The new sanctions also mean that countries would have to go for payment on exchange of goods only and also on local currency too, which may crunch Iran’s monetary system.
All the major players, including MRPL and IOC’s Chennai Petroleum Corporation were facing difficulties to secure insurance for their refineries. According to reports, the OPEC member would lose more than $2.5 billion of revenue due to global sanctions.
Importing countries may be forced to go for payment to Iran through exchange of goods and local currency. MRPL’s imports from Iran are down 39% from 6.2 million tonne (MT) during the last financial year to 3.8 MT this fiscal.
CPCL was also finding it difficult to secure technology licensing for its upcoming Rs 8000-crore units. The National Iranian Oil Company (NIOC) owns more than 15% stake in CPCL, raising concerns among insurers. Recently, HPCL too had also raised concerns regarding securing of re-insurance.
