Four overseas projects, two telecom, one petroleum
pipeline and one power plant, have received approval
for insurance under the National Export Insurance Account
(NEIA), a pool for big projects executed overseas by
up recently by the government of India and operated
by Export Credit Guarantee Corporation of India Limited
(ECGC) the NEIA offers credit insurance covers for projects
(long- and medium-term) executed by Indian companies
ECGC offers export insurance cover against payment default
by overseas buyers, insolvency, political risks and
other risks for overseas projects executed by Indian
companies. For some projects ECGC is unable to provide
risk cover due to reasons like an extended payment period,
political and economic situations prevailing in that
country, inordinately large-value contracts, etc. But
as such projects have to be insured in national interest,
the government decided to set up NEIA to provide insurance
covers to Indian exporters.
two telecom projects, worth $35 million, are being implemented
by Telecommunications Consultants of India Limited (TCIL)
in Sudan, while the Rs180 crore, 741km petroleum pipeline
project (Khartoum to Port of Sudan) is being executed
by ONGC Videsh Limited (OVL). The fourth project, a
2 x 250 MW power plant will be executed by Bharat Heavy
Electricals Limited (BHEL) in Indonesia and is valued
at $450 million.
to ECGC chairman and managing director A V Muralidharan,
in principle approval for insurance cover has been given
for all the projects barring OVL''s pipeline project.
OVL''s project, final contracts are yet to be signed
between the Indian exporters and the overseas buyers.
The total value of the projects may differ slightly
when the parties sign the final contract."
had issued a credit insurance policy for OVL''s project
in April 2005 to cover five payment installments at
a time, on a rollover basis. Once payment for one installment
was received, the credit insurance cover was extended
for the next installment.
to Muralidharan, OVL wanted cover only up to 10 installment
payments out of 18. "OVL has received payment for
first two installments. So at present the risk cover
exists for the third to the seventh installments. These
are covered under ECGC''s own account."
was decided to offer risk cover under NEIA for installments
8-10. "We have called for premium from OVL for
installments 8 to 10," he adds.
the government has contributed Rs246 crore and by the
end of XI Plan period the corpus is expected to touch
a figure of Rs2,000 crore. As per the guideline at any
point of time risks up to 10 times of the corpus could
be covered. Apart from the government''s contribution,
the corpus consists of premium income, investment income
and claims recovery.
should fulfill the following criterion to qualify for
support under NEIA:
medium/long term exports are eligible for cover
should be commercially viable
should have proven track record
is not in a position to cover the risk on its own
is not available or inadequately available