The Petroleum & Natural Gas Ministry is willing to pool in half the amount into the Rs 2,000-crore proposed fund to provide insurance to domestic refiners which process Iranian crude oil.
But, the fund may not be enough to take care of the entire re-insurance cover of these refiners, a Petroleum Ministry official said, adding that there was need for some Iranian money or sovereign guarantee.
The Rs 1,000-crore contribution from the Petroleum Ministry will come from the Oil Industry Development Board (OIDB) fund. This, according to Ministry officials, has already been communicated to the Finance Ministry, which will take the final call.
Rajiv Takru, Financial Services Secretary, had recently said “There is absolutely no sovereign guarantee which is going to be given. I am told one of the private refineries wants one.”
From the Finance Ministry side, New India Assurance, United India Insurance, and National Insurance and Oriental Insurance will be a part of the fund.
In fact, these issues were discussed with Iranian Oil Minister Rostam Qasemi during his recent visit to India. During the talks, Iran reportedly offered insurance to Indian refiners. Both sides also discussed the issue of reinsurance for the composite cover of Indian refineries, which had recently affected crude oil purchase from Iran.
Regarding crude oil supplies from Iran, sources said there had been no change in position in the last two-three months. While supplies from Iran are yet to be fully restored, Saudi Arabia, Iraq, Kuwait and some other West Asian producers are feeding domestic refiners.
Recently, India, China and seven other countries received a fresh six-month waiver from the US State Department on Iran sanctions for agreeing to reduce oil purchases from Tehran. More than the sanctions, it was the insurance issue that was affecting imports from Iran, sources said.
Though Indian insurance companies are not governed by US and European sanctions, they do depend on reinsurance from Western companies because of the high risks. The sanctions by the West against Iran’s controversial nuclear programme have discouraged global re-insurers from taking on the risk.
However, if India is able to work out a mechanism, imports from Iran will resume, sources said.