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Mishap-hit Reliance signs 'biggest' insurance deal with Oriental

Petrochemicals major Reliance Industries Limited has signed an insurance deal of Rs 160 billion with a consortium led by Oriental Insurance to cover the plants and machinery at its petrochemicals complex in Hazira and Jamnagar.

According to industry sources, the company had earlier failed to go for insurance risk cover under advance loss of profit particularly during the construction period of its petrochemical complex at Jamnagar and Hazira 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 160 billion deal is considered to be the biggest in India where the total General Insurance claims are in the range of Rs 90 billion, 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 paying Rs 1 billion towards premium charges for the insurance cover of its plants and machinery during the construction period of the power plant at Dabhol in Ratnagiri district in Maharashtra.

Recently, RIL has claimed about Rs 2.44 billion ($ 57 million) for physical damage, loss of revenue, increased cost of working and other such losses as a result of the accident to the single buoy mooring system at the Hazira petrochemicals complex.

In this account, the company has incurred an additional operating cost of Rs 1.05 billion ($ 25 million) during the last nine-month period ended December 31, 1998.

UNI

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