Media reports indicate that the energy insurance pool of Rs 2,000 crore that was formed by the central government for refineries processing Iranian crude oil is not found sufficient by some private refineries.
For example, Essar Oil, which has to import oil from Iran for processing it in its Gujarat refinery, is seeking
sovereign guarantee from the Indian government for the import.
While the company seeks a cover of Rs 12,000 crore, the oil pool has the capacity to insure only Rs 2,000 crore.
Indian oil firms want the government to give guarantee because sanctions imposed by Western countries on Iran prohibits European companies from providing reinsurance cover to companies importing oil from the gulf nation.
It may be noted that Essar Oil operates a 20 million tonne (mn t) a year refinery in Gujarat.
The government has been thinking of providing sovereign guarantee to public sector refineries but it is the first time when proposal of providing sovereign guarantee to a private company has come up.
If the government decides to guarantee, Essar may have to pay Rs 250 crore -Rs 300 crore towards sovereign and insurance premium.
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