Indian govt to decide on insurance for OVL in Sudan

By Amitav Ranjan

NEW DELHI, JUNE 23, 2004 (indianexpress) — The Cabinet Committee on Economic Affairs will have to decide tomorrow if Indian firms need to buy political risk insurance for their investment in Sudan.

The Finance Ministry has suggested that ONGC Videsh Limited (OVL) take insurance cover for their equity while investing close to $750 million in constructing a product pipeline from Khartoum refinery to Port Sudan and in revamping the Port Sudan refinery.

It pointed out that since the bulk of OVL’s investments were headed for Sudan, it was important for the overseas arm of ONGC to balance its risk equitably. To that end, it also limited OVL’s exposure in Sudan to $1 billion.

The ministries of Petroleum and External Affairs, however, say insurance is no longer required after peace protocols have been signed by Khartoum and the rebels this month. Al Neel, acting Secretary General in Sudan’s Ministry of Energy and Mining, has told Indian Ambassador Ashok Kumar that Khartoum found it ”insulting”.

Sudan has given sovereign guarantee and the two countries have signed the Bilateral Investment Protection Agreement. ”OVL is trying to suggest that Sudan is not conducive for foreign investment,” Neel told Kumar. ”I am afraid this is harming our image…It could affect negatively our relations with Sudan Oil Ministry to the detriment of our involvement in Greater Nile Oil Project,” wrote Secretary (Asia, North Africa) R.M. Abhyankar.

The insurance costs OVL $32.12 million and returns from the project would come down to 10 per cent from the estimated 12.12 per cent.