KARACHI: The insurance of energy sector infrastructure in Pakistan is not only indispensable to mitigate the risk of operational and financial losses of the public and private sector’s projects of the country, but it also established an investment-friendly climate to attract local and foreign investment within the sector.
Talking exclusively to Business Recorder, Director Fidelity Insurance Brokers Hassan Rehman stated that energy insurance plays a pivotal role in mitigating these risks, safeguarding investments, and ensuring the smooth operation of energy projects.
The energy sector, by its nature, is exposed to a myriad of challenges ranging from geopolitical uncertainties to technical failures and environmental hazards. These risks can disrupt operations, lead to financial losses, and jeopardize the viability of energy projects.
In such a dynamic environment, the role of energy insurance cannot be overstated, he said. Energy insurance serves as a bulwark against the multitude of risks inherent in the sector by providing financial protection and tailored risk management solutions to the unique needs of energy projects.
Like many different growing countries, Pakistan has been suffering with an intense energy crisis for numerous years, as the demand for energy continues to surge due to population growth, urbanization, and industrialization, while the supply of conventional energy sources remains inadequate. He said electricity is a fundamental part of the economy and considered necessary for most economic and human activities.
According to Economic Survey of Pakistan, Pakistan’s total installed electricity capacity stands at 41,000 MW; the percentage share of hydel, thermal, nuclear, and renewable is 25.8 percent, 58.8 percent, 8.6 percent, and 6.8 percent, respectively.
As the significance of energy insurance emerges as a critical component in navigating the power sector’s complexities, this growth trajectory not only promises opportunities but also presents a mosaic of risks that necessitate proactive measures to safeguard investments and ensure the seamless operation of energy projects, Director Fidelity Insurance Brokers mentioned.
As far as investors are concerned, the energy insurance represents a prudent risk mitigation strategy by transferring certain risks to insurers; hence investors can safeguard their capital investments and enhance the attractiveness of energy projects. Similarly, for project developers, energy insurance offers indispensable protection against unforeseen events that could derail project timelines and budgets.
From construction risks during the project implementation phase to operational risks once the project is online, insurance coverage ensures continuity and resilience in the face of adversity. He mentioned that Fidelity Insurance Brokers (FIB) provided comprehensive insurance solutions to Pakistan’s energy power sector by insuring different power projects generating more than 12,000-MW.
Our company (FIB) has a policy to understand the unique risks inherent in Pakistan’s energy landscape, from geopolitical uncertainties to technical failures and environmental hazards. Therefore, our insurance policies provide financial protection and risk management solutions, ensuring the smooth operation of energy projects, he further said.
Through proactive risk assessment and mitigation strategies, we safeguard investments, enhance project resilience, and foster confidence among stakeholders. Whether it’s coverage for property damage, business interruption, or liability claims, our comprehensive insurance offerings provide a safety net against potential losses, he added.
Copyright Business Recorder, 2024