India grants 3-month extension to Iranian underwriters

India has extended a temporary approval to Iranian underwriters Kish P&I Club and Moallem Insurance Co for covering container and tanker vessels calling at Indian ports, in a move that should clear a back log of non-oil shipments.

The three-month extension is unlikely to revive imports of Iranian oil as most Indian buyers have halted shipments because of an insurance issue related to their refineries.

The previous approval given to Kish and Moallem to cover Iranian vessels lapsed on June 28. Since then Iran-bound containers of engineering goods, rice, soymeal and other item shave been stranded at Indian ports, while shipment of fertilizers and other India-bound goods have piled up at Bandar Abbas port in the sanctions-hit nation.

The approval of the three-month extension to Kish and Moallem takes effect from the date of the lapse, according to a shipping ministry letter dated July 17 to the Directorate General of Shipping and seen by Reuters.

European Union sanctions against Iran from July 1, 2012, bar members of Europe-based International Group (IG) of Protection and Indemnity (P&I) - who account for the majority of cover for the tanker market - from insuring Iranian oil and other shipments, leading to the emergence of new, untested insurance providers.

India, however, is worried about the financial strength of Kish and Moallem and has sought government guarantees to back up the companies, while granting them three-month approvals to insure ships calling at Indian ports.

India is willing to give long-term approval to the two insurers if Iran backs them, two shipping ministry sources said.

“It is not possible for Iranian clubs to meet all the conditions because of sanctions so we had asked them for a government guarantee,” said one of the ministry sources.

Kish and Moallem have sought more time to get Tehran's backing because the process was delayed by Iran's recent elections, said the ministry source.

India receives its declining crude imports from Tehran in Iranian vessels, while exports of non-oil commodities and industrial goods are largely done on vessels operated by Hafiz Darya Shipping Lines.

The United States in March imposed sanctions on Kish and Bimeh Markazi-Central Insurance of Iran, known as CII, for providing insurance and reinsurance for the National Iranian Tanker Co, or NITC.

Moallem has been blacklisted by the United States for providing insurance on the shipments of other goods.

Europe and the United States imposed tough sanctions on Iran last year aimed at pressuring Tehran to negotiate the curbing of its disputed nuclear program.

Most Indian refiners except for Essar Oil have halted imports of Iranian oil from April this year because of not being able to insure refineries processing the crude due to the EU sanctions covering reinsurers.