Ongc Cuts War Premium To $3.9 Mn

The Oil and Natural Gas Corporation Ltd (ONGC) has reduced the additional cost of war-risk cover to $3.9 million.

This was despite the hardening global reinsurance market plagued by the September 11 terrorist attacks which saw war-risk cover being curtailed and offered only at a premium.

This was the primary agenda at the ONGC board meeting today in Delhi as the directors were kept abreast on the latest developments on the corporation's payment of additional war-risk cover.

"We have been able to rework the terms and conditions of the cover with the lead underwriter Zurich Global Energy," said company sources.

 

ONGC managed to combine and merge various clauses in the policy in order to ensure against double payment for the cover, they added.

Following the terrorist attacks, global underwriters, hampered by reduction in capacity, sent seven-day cancellation notice on war cover issued to Indian companies with offshore facilities.

The reinsurers proposed an additional payment of $4.7 million for reinstating the cover for ONGC's offshore properties valued at an aggregate $11,261 million.

Negotiations by the public sector oil undertaking and its insurance company -- the New India Assurance Company -- have reduced the amount of additional premium ONGC has to cough up for terrorist and war cover. The additional premium for payment is due on October 18.

ONGC was the first victim to the apprehensions over India's vulnerability in the present crises. The additional premium paid over will cover war and terrorist attacks till ONGC's insurance policy comes up for renewal in May 2002.

The public sector oil and gas major renewed its insurance programme for 2001-02 at a premium of $22.5 million with a higher deductible of $20 million in view of the hardening reinsurance market.