Financial Daily from THE HINDU group of publications
Saturday, Jul 17, 2004

Cross Currency

Group Sites

Money & Banking - General Insurance
Industry & Economy - Power

India Insure arranges hydrology cover for Malana Power

Our Bureau

Mumbai , July 16

`INDIA Insure', an insurance broking firm has arranged `Hydrology Risk' for the Malana Power Company.

The insurance cover has been facilitated by ICICI Lombard General Insurance Company and the policy has been placed for coverage of Rs 10 crore, said a press release.

Under the terms of agreement, should power generation at Malana fall below a specified percentage, the insurance company will pay the first Rs 10 crore towards loss of profit to the power company. This will help the power entity pay its dues to funding institutions among other expenses, the release said.

The country's first hydel power generating unit set up by an IPP, Malana Power has a generating capacity of 86 MW. At a competitive capital cost of Rs 3.75/MW, the unit will sell power at Rs 2.45/KW, which is one of the lowest generating costs, the release said.

"Projects dependent on the vagaries of weather are now increasingly relying on a special insurance cover - weather derivatives - for credit enhancement. With the crop insurance sector experiencing losses of over 400 per cent, the use of weather derivatives will go a long way in bringing down these losses. In the case of some hydro-power projects, lenders are looking for hydrology cover prior to financing these projects.

In the event of a shortfall in rainfall or snow melt; which affects the quantity of power generated, the insurance company will pay for the loss of profit. However, the key impediment in offering this cover is the non-availability of sufficient data, which has prohibited many covers to be reinsured," said the release quoting Mr V. Ramakrishna, Managing Director, India Insure Risk Management Services.

India Insure was instrumental in concluding the first reinsurance-driven hydrology cover in the country last year.

More Stories on : General Insurance | Power

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Plea to scrap pension scheme contract to ADB

Rupee up 15 paise; securities recover
SBT goes live with RTGS
Mandatory divestment clause in insurance joint venture may go
`Indian IT cos may lose to global firms on Basel II'
LIC premium through ECS
Katra Liquor offers insurance cover to shop boys
AP gets Rs 1,200 cr from LIC
India Insure arranges hydrology cover for Malana Power
Central Bank pays Rs 35 cr-dividend
Online train tickets from Corpn Bank
Exim Bank plans to market consultancy services abroad
SIDBI issues bonds on pvt placement
Rescheduling of farm loans to lift credit offtake
SBI staff to strike work on Aug 9

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2004, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line