India has allowed conditional import of crude oil by refiners from
Iran from July 1 with the Islamic nation arranging shipping and insurance in the wake of
European sanctions.
"The government has allowed import from Iran on cost, insurance and freight (CIF) basis for six months beginning July 1 or till the issue is resolved," an industry source said.
European sanctions, announced on January 23, prohibit
EU-based entities from providing insurance and guarantees for transportation of oil from Iran. Most of the Indian shipping lines including state-owned Shipping Corporation of India take protection and indemnity cover (P&I) mainly from them.
As a remedy, the Oil Ministry has proposed that Iran ship the crude oil in its own ships, practically absolving the importer of the liability to get insurance cover for the carrier and the oil.
When contacted, an official of the Indian National Shipowners Association (INSA) said, "We have requested the government for providing sovereign guarantee on the pattern of Japan and China and CIF for importing crude from Iran in the wake of European sanctions."
The official added that the Shipping Ministry has also taken up the matter with the Finance Ministry and INSA was hopeful of a solution soon.
Also, the Oil Ministry is seeking intervention of the Finance Ministry to get state-owned General Insurance Corp (GIC) to provide insurance cover to domestic ships carrying oil from Iran.
Sovereign guarantee to cover for loss of ship or loss of oil cargo, may be extended to shippers as the last resort in case all options fail.
India has relegated Iran as its third largest supplier by bringing down imports from 18.5 million tons in 2010-11 to 17.44 million tons in 2011-12 and to 15.5 million tons this fiscal.
Domestic shippers have refused to transport oil from Iran beginning July in absence of insurance cover.
Unlike private refiners, state-owned oil companies need government permission to import oil on a CIF basis requiring the seller to arrange for the carriage of goods by sea.
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