NEIA gives in principle cover for 4 export projects

Venkatachari Jagannath
07 April 2007

Set 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 overseas.

Normally 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.

The 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.

According 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.

"Except 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."

ECGC 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.