ONGC Receives Final Claim Settlement for BHN Platform Accident
ONGC CMD Mr. R S Sharma received today a check of Rs. 864 crore toward the final and overall payment of all insurance claims in respect of the BHN accident against ONGC's Offshore Package Policy. The check was handed over by CMD of United India Insurance Company (UIIC) Mr. M K Garg. With this, the total amount received by ONGC toward the BHN accident loss works out to around Rs. 1,700 crore, the largest ever insurance claim.
BHN accident took place on July 27, 2005, causing a major fire which totally destroyed the platform, while Multipurpose Support Vessel (MSV) 'Samudra Surkasha', which sustained major damages, sank on August 2, 2005. The heat and smoke of BHN fire partially affected other installations like BHF platform, interconnecting bridges of MNW and BHF platform, sub-sea pipelines.
ONGC's offshore properties damaged in the above accident were insured with United India Insurance Company (UIIC) under ONGC's Offshore Package Insurance Policy for 2005-06 Policy year w.e.f. May 11, 2005 against all risk of physical damage/loss. As BHN Platform was totally destroyed by the accident/ fire, claim for BHN's full insured value i.e. US $195.08 Million less Policy deductible US $20 Million was lodged by ONGC on August 10, 2005, and an "on account" payment of US $175.08 Million (Rs 768.56 crore), was received by ONGC from UIIC on September 16, 2005 i.e. within 50 days from the date of accident. A second 'on account payment' of US $14.66 Million (Rs. 65.12 crore) towards loss of modifications carried out at BHN Platform for 30" Oil Mumabi Uran Trunk (MUT) pipeline, stores/spares lost on BHN Platform was received on February 10, 2006.
Due to the uncertainties regarding restoring the partially damaged facilities to their pre existing condition and the time frame in which the debris of BHN could be removed after due process, it was apprehended that the claim settlement process would stretch over a long period of time. Therefore, it was thought desirable to consider the proposal mooted by the underwriters for an un-repaired damage settlement provided the offer was reasonable and acceptable to ONGC management.
The further interactions between ONGC team of officials and loss adjustors culminated in arriving at an agreeable sum towards settlement of all balance claims arising out of BHN accident.
The claim settlement was ably facilitated by the Reinsurance brokers M/s Jardine Llyod Thompson (JLT), London, supported by their Indian partner M/s Heritage Insurance brokers Pvt. Ltd.
Considering the need for an expeditious settlement under the provision available in Policy for 'Unrepaired damage settlement', and keeping in view the time value of money, the ONGC Board, in its 162nd Board meeting held on December 23, 2006 had approved acceptance of US $386.25 million (net of deductible) towards overall settlement/full and final payment of all Insurance claims in respect of BHN accident/sinking of MSV 'Samudra Suraksha', against ONGC's Offshore Package Insurance Policy on lump-sum 'unrepaired damage settlement' basis. The present claim is in absolute conformity with the approval of the ONGC Board.
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