Dabhol insurance claims may end up in court

Vol 13, PW 9 (08 Oct 09) People & Policy

Ratnagiri Gas & Power is threatening to approach a consumer court in Maharashtra to settle claims against insurance companies refusing to pay in full for damaged turbines and rotors at the Dabhol power station.

“We might have to approach the consumer court to get justice,â€‌ a top Ratnagiri Gas source tells PETROWATCH. For the past three years Ratnagiri Gas, a 50:50 joint venture between GAIL and NTPC, has been playing tug-of-war with state-owned insurers National Insurance and Oriental Insurance over claims worth Rs280cr ($62m) ever since the Dabhol station restarted in May 2006.

“This is what is pending after we got an insurance pay-out of about Rs70cr ($15m),â€‌ Ratnagiri Gas tells us. Our source adds that the insurance companies are trying to wriggle out of paying.

“They want to prove that design deficiencies (excluded by the insurance policy) caused the damage but (turbine manufacturer) General Electric disagrees.â€‌ GE is taking Ratnagiri’s side in the dispute, we hear.

“GE carried out a â€کRoot Cause Analysis’,â€‌ says our source, “and came to the conclusion that corrosion and not design deficiencies are to blame. Corrosion damage is covered by the insurance policy but even here there’s no clear meeting point with insurers.

â€‌ Both state-owned insurers have re-insured their Dabhol risk with General Insurance Corporation, another Indian state-owned insurer, but complain they will go bankrupt if they pay these claims in full. Despite bad blood, Ratnagiri Gas is willing to give its insurers the benefit of the doubt.

“This is a learning experience for us, and for the insurers,â€‌ stresses our source. “None of us has gone through this process before.

â€‌ He also says he is not sure if General insurance has re-insured its risks, and says Ratnagiri Gas would rather settle the matter out of court, if possible. “We are a government promoted company like our insurers, so we have asked the finance ministry to intervene.