Financial Daily from THE HINDU group of publications
Saturday, Mar 25, 2006
Financial Daily from THE HINDU group of publications Saturday, Mar 25, 2006 |
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Industry & Economy
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Exports & Imports Money & Banking - Insurance ECGC unveils scheme to provide credit risk cover Our Bureau
The NEIA will initially have a corpus of Rs 66 crore, which means that insurance worth Rs 660 crore can be provided for projects.
MR CHRISTY FERNANDEZ (right), Chairman and Managing Director, ECGC, with Mr S. Prabhakaran, Executive Director, at a press conference in Mumbai on Friday. — Paul Noronha
Mumbai , March 24 Export Credit Guarantee Corporation of India (ECGC) and the Ministry of Commerce have set up a National Export Insurance Account (NEIA) Scheme that would provide credit risk cover for medium and long-term high-value projects. This account will eventually have a corpus of Rs 2,000 crore. Dr Christy Fernandez, CMD of ECGC, said that the cover provided for these `project exports' would be ten times the amount of the corpus. The cover is meant to benefit project exports with duration of more than five years and in the categories of civil constructions, power transmission, turnkey projects, supply of equipment, telecommunication ventures, services, and investments in overseas joint ventures.
Scope of scheme
Dr Fernandez also said that the scheme will be accessible only to projects for which reinsurance cover is not available in India or abroad but are commercially viable and are of national importance. The projects that would fit this category would include BHEL's projects in Sudan, road development projects in Afghanistan, and oil exploration projects of ONGC Videsh. Projects that have international, bilateral, or World Bank funding would also be included. The NEIA will initially have a corpus of Rs 66 crore, which means that insurance worth Rs 660 crore can be provided for projects. This corpus will be increased to Rs 180 crore in the next financial year and eventually to Rs 2,000 crore by the end of the 11th five-year Plan. Until now, short-term projects accounted for 90 per cent of the credit risk cover provided by ECGC because there was limited capacity to undertake such long-term and high-risk projects. Dr Fernandez said that out of India's total export market of $79 billion, project exports accounted for $445 million. However, only 10 per cent of the exports of the country enjoy credit guarantee, he said All potential projects that are short-listed by the ECGC will be directed to the Committee of Directions. The members of this panel would include the Secretary of the Ministry Of Commerce, Secretary of the Ministry of External Affairs, the Secretary of the Department of Economic Affairs, the Deputy Governor or ED of the RBI, and the CMDs of ECGC and Exim Bank. The account would be maintained and operated by the NEIA Trust, which will be registered early next week when the scheme will be operational. Claims will be settled through ECGC.
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