Lanco Infratech Ltd has filed a claim of around Rs 200 crore under the ‘advanced loss of profit’ (ALOP) policy, the biggest claim from a corporate house in the current financial year.
State-owned New India Assurance, the lead insurer, would be the worst hit, as it would have to bear half of the claim amount. Confirming the development, a senior New India Assurance official said, “We have already paid Rs 50 crore on the account, and the remaining amount would be settled shortly.”
General Insurance Corporation of India (GIC Re) was the reinsurer for the policy.
An ALOP policy generally pays for the actual loss of gross profit incurred during the period of delay, from the scheduled date of commencement of commercial operations till the actual date of commencement of operations, subject to a time excess and indemnity period (the time for which benefits are payable under an insurance policy) selected.
Sources say the claim was made after fire broke out at the company’s 1,200-Mw Anpara power project in Uttar Pradesh in April, which damaged a part of the boiler. “The air heater of the power project was damaged. This caused the delay in commissioning the first 600-Mw unit,” said a source. The unit, which became operational earlier this month, was originally scheduled to be commissioned in May. Hence, the company has made claims for a delay of five months.
Lanco Infratech declined to comment on the issue.
“Though the damage has been fixed now, the project has been delayed. The total claim includes profit for the last five months, in addition to the cost of fixing the problem,” sources said. The cost of fixing the damage is around Rs 10 crore, and an additional claim of Rs 185 crore was made under the loss of revenue, said a GIC official. “This is the biggest claim from corporates so far in the current financial year,” he added.
The second unit of the Rs 4,100-crore, 2x600 Mw power project is expected to be commissioned in early 2012. Lanco has signed power purchase agreements with distribution companies of Uttar Pradesh State Electricity Board.