According to The Financial Express report on Saturday, the Indian government will set up a 20-billion-rupee (about USD 400 million) fund for this end, and will extend sovereign guarantees up to 100 billion rupees (about USD 2 billion) for claims beyond the stated figure.
The measure comes after two major Indian oil refineries, Mangalore Refinery & Petrochemicals Limited (MRPL) and Essar Oil Ltd, said they had difficulty purchasing 100,000 barrels of Iranian oil on a daily basis and would be forced to halt imports from Iran because of insurance problems stemming from US-led sanctions against Tehran.
Indian economic sources said the country’s Department of Financial Services has proposed the EIP be created within a month. India’s domestic insurers will contribute ten billion rupees (about USD 200 million) to the fund out of the reinsurance premium paid to them by refiners, and the Oil Industry Development Board will pay an equal amount.
The proposal states that these contributions will be continued annually for the next three years to eventually build a corpus of 60 billion rupees (about USD 1.2 billion).
State-run Oriental Insurance Company and New India Assurance Company will be the initial contributors as they underwrite risks of MRPL and Essar Oil Ltd, respectively.
The sources noted that private Indian insurance firms will also have the option to participate in the EIP fund.
India is among Asia’s major importers of energy, and relies on the Islamic Republic to satisfy a portion of its energy requirements.
