India may instruct its biggest ocean carrier, Shipping Corp. of India Ltd, to bring crude from Iran after local tanker owners shunned an emergency insurance scheme for shipping oil from the sanctions-hit nation, according to two government officials.

United India Insurance Co. Ltd launched the emergency scheme last month to replace a cover that was stopped by European insurers from 1 July following a European Union embargo on purchases from Iran, but fleet owners have rejected it saying the cover is inadequate.

A government directive to state-run SCI would imply it would have to ship Iran crude with the cover provided by United India.

“It would be the last resort to keep the oil flowing from Iran. We may have to take that route if there is no other way out of the crisis,” one of the two people said.

The second person confirmed the government is considering the option if existing alternatives do not work. Both declined to be named.

The European Union banned the purchase, transport, finance and insurance of Iranian oil from 1 July, reacting to Iran’s nuclear program. Following this, the London-based International Group of Protection and Indemnity Clubs (IG Clubs) stopped providing third-party liability cover to ships hauling Iranian crude.

The IG Clubs, a 13-member group, insures around 95% of the world’s tankers, placing a $ 1 billion limit on individual claims that involve pollution damage and wreck removal.

United India’s scheme, on the other hand, is a $ 50 million third-party liability cover against pollution damage, wreck removal and personal injury claims for local ships transporting Iranian crude. It also agreed to extend a separate $ 50 million cover for hull and machinery to protect local ships against physical damage.

India, the second biggest buyer of Iranian crude after China, adopted a two-pronged strategy to deal with the EU ban. It allowed state-run oil refiners to buy crude with ships and insurance arranged by Tehran on a case-to-case basis. It also asked state-run United India to provide cover to Indian ships hauling Iran crude for state-run oil refiners.

Both strategies have met with limited success mainly because the National Iranian Tanker Co. does not have enough ships suitable to call at Indian ports, and local tanker owners have said United India’s cover is inadequate for them to travel to Iran to haul crude.

S. Hajara, chairman and managing director of SCI, said he was not aware of any plan for instructing SCI to haul Iran crude. A shipping ministry spokesman declined to comment.

“If the President of India asks me to go to Iran to bring crude, who am I to say no?” asked a Shipping Corp. official.

SCI is 63.75% owned by the government and the balance 36.25% is with the public. Still, he said the government cannot ignore the views of the public shareholders.

Great Eastern Shipping Co. Ltd, India’s biggest private ocean carrier, last week refused to comply with a shipping ministry request to ship Iranian crude for Mangalore Refinery and Petrochemicals Ltd, saying the United India cover was inadequate. Great Eastern has signed an annual contract with the state-owned refiner to bring crude from Iran but halted the shipments due to lack of cover. Mangalore is the biggest buyer of crude from Iran. The contract began in April.

Shipping Corp.’s Hajara said there were several problems with the United India cover. “They have offered U.S. $ 50 million per voyage whereas we had asked for $ 50 million per incident,” he said on Tuesday. Besides, United India was yet to tie up way port cover. “Unlike United India, the guarantee extended by the IG Clubs is acceptable to ports all over the world. United India, I believe, has tied-up with some entities in Iran. But that is not sufficient; there are other way ports along the way.”

Hajara said the $ 50 million hull and machinery cover was also insufficient because the value of some big ships was much more than the cover limit extended by United India.

“Finally, the premium charged by United India is very high,” he added.

A Mumbai-based shipping industry executive said lenders would not allow ships to operate with a cover lower than the value of the asset. The official requested anonymity. United India, however, is in no mood to budge.

“There is no scope for enhancing the limit beyond $ 50 million for both categories simply because re-insurance is not available. And we don’t have the financial strength to increase the limit on our own,” a spokesman for United India said. “If the ship owners think that the cover is inadequate, we can’t do anything about it.”

Mercator Ltd is the only tanker owner that has agreed to take the United India cover and travel to Iran. It’s ship, Omvati Prem, was hired by MRPL to load crude from Iran on Wednesday. Mercator, however, said it would “review” its decision to bring crude from Iran based on further developments relating to sanctions.