Mumbai: Cash-strapped Air India, operated by the state-run National Aviation Co. of India Ltd (Nacil), has called for a re-tender for its aviation insurance policy that was due for renewal on 1 July, according to people familiar with the development.
This may result in Nacil’s insurance bill jumping up by 30-40%, the people said on condition of anonymity.
In trouble: National Aviation Co. of India Ltd has asked the bidders to submit financial bids by 20 August. Abhijit Bhatlekar / Mint
In April, Nacil floated a tender inviting bids from insurers, either as a stand-alone company or in a consortium.
A consortium of public firms, led by the New India Assurance Co. Ltd, and another group of private companies led by ICICI Lombard General Insurance Co. Ltd were shortlisted for submitting financial bids by 4 June.
But on 29 May, the insurers received an email from Nacil informing them not to submit financial bids as the tender had been called off, the people said.
On 3 June, Nacil floated a new tender, this time inviting technical bids only from stand-alone companies and not consortia. It has extended its policy for three months and will renew it by 1 October.
In the earlier bid, the New India Assurance consortium offered a 5% discount to last year’s premium of $18 million (Rs85.68 crore), the people said.
However, after the crash of an Air France flight from Brazil to Paris on 1 June, the insurance cost will be 30-40% higher, they said.
New India Assurance had offered to close the transaction early to avoid a potential hardening of premium after the crash, they added.
Air India declined to respond to a query relating to this matter.
The people said that contrary to its own re-tender rules, Nacil allowed a consortia led by New India Assurance and Reliance General Insurance Co. Ltd to submit a technical bid, while ICICI Lombard made its bid as a stand-alone entity.
Nacil has asked the bidders to submit financial bids by 20 August, they said.