MUMBAI, JAN 20: Petrochemicals major Reliance Industries Limited (RIL) has signed an insurance deal of Rs 16,000 crore with a consortium led by Oriental Insurance to cover the plants and machineries at its petrochemicals complex in Hazira and Jamnagar. According to industry sources, the company had earlier failed to go in for insurance risk cover under advance loss of profit particularly during the construction period of its petrochemical complex at Jamnagar and Hajira and as a result, in recent cyclone and flood, RIL incurred heavy losses.Realising this lapse, the company now made an insurance cover with Oriental Insurance at a very high premium. The Rs 16,000 crore deal is considered to be the biggest in India where the total general insurance claims is in the range of Rs 9,000 crore, sources said.
The insurance firm is now going around with other insurance firms and subsidiaries to reinsure the entire amount. Citing an example of the transnational Enron Corporation, sources said, the company is payingRs 100 crore towards premium charges for the insurance cover of its plants and machineries during the construction period of the power plant at Dabhol in Ratnagiri district in Maharashtra.
Recently, the RIL has claimed about Rs 244 crore (US $ 57 million) for physical damage, loss of revenue, increased cost of working and other like losses as a result of the accident to the single buoy mooring (SBM) system at the Hazira petrochemicals complex. In this account, the company has incurred an additional operating cost of Rs 105 crore (US $ 25 million) during the last nine-month period ended December 31, 1998.
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