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Commitments | 12 Months Ended
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Dec. 31, 2018
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Commitments |
34. | Commitments
a. Contracts a.1 Subsidiary Tequimar has agreements with CODEBA and Complexo Industrial Portuário Governador Eraldo Gueiros, in connection with its port facilities in Aratu and Suape, respectively. Such agreements establish a minimum cargo movement of products, as shown below:
Port |  | Minimum movement in tons per year |  | Maturity
Aratu |  | 397,000 |  | 2031
Aratu |  | 900,000 |  | 2022
Suape |  | 250,000 |  | 2027
Suape |  | 400,000 |  | 2029
If the annual movement is less than the minimum contractual movement, the subsidiary is liable to pay the difference between the effective movement and the minimum contractual movement, based on the port tariff rates in effect on the date established for payment. As of December 31, 2018, these rates were R$ 6.99 per ton for Aratu and R$ 2.54 per ton for Suape. The subsidiary has met the minimum cargo movement required since the beginning of the contractual agreements. a.2 Subsidiary Oxiteno Nordeste has a supply agreement with Braskem S.A. which establishes a minimum annually consumption level of ethylene, and conditions for the supply of ethylene until 2021. The minimum purchase commitment clause provided for a minimum annual consumption of 205 thousand tons in 2018. Should the minimum purchase commitment not be met, the subsidiary would be liable for a fine based on the current ethylene price for the quantity not purchased. According to contractual conditions and tolerances, there are no material issues regarding the minimum purchase commitment. a.3 Subsidiary Oxiteno S.A. has a supply agreement with Braskem S.A., valid until 2023, which establishes and regulates the conditions for supply of ethylene to Oxiteno based on the international market for this product. The minimum purchase is 44,100 tons of ethylene annually. Should the minimum purchase commitment not be met, the subsidiary would be liable for a fine based on the current ethylene price for the quantity not purchased. According to contractual conditions and tolerances, there are no material issues regarding the minimum purchase commitment. b. Insurance Coverage The Company maintains insurance policies with the objective of covering several risks to which it is exposed, including loss of profits, losses and damage from fire, lightning, explosion of any kind, gale, aircraft crash, electric damage, and other risks, covering the industrial plants and distribution bases and branches of all subsidiaries. The maximum compensation values based on the risk analysis of certain locations are shown below:
|  | Maximum compensation value (*) |  |  |
Oxiteno |  | US$ | 1,142 |  |  | (equivalent to R$ 4,425 as of 12/31/2018) (*)
Ipiranga |  | R$ | 1,032 |  |  |
Ultracargo |  | R$ | 949 |  |  |
Ultragaz |  | R$ | 266 |  |  |
Extrafarma |  | R$ | 160 |  |  |
(*) | In millions. In accordance with policy conditions.
The General Liability Insurance program covers the Company and its subsidiaries with a maximum aggregate coverage of US$ 400 million (equivalent to R$ 1,550 million as of December 31, 2018), against losses caused to third parties as a result of accidents related to commercial and industrial operations and/or distribution and sale of products and services. The Company maintains liability insurance policies for directors and executive officers to indemnify the members of the Board of Directors, fiscal council, directors and executive officers of Ultrapar and its subsidiaries (“Insured”) in the total amount of US$ 80 million (equivalent to R$ 310 million as of December 31, 2018), which cover any of the Insured liabilities resulting from wrongful acts, including any act or omission committed or attempted, except if the act, omission or the claim is consequence of gross negligence or willful misconduct. In addition, group life and personal accident, health and national and international transportation and other insurance policies are also maintained. The coverage and limit of the insurance policies are based on a careful study of risks and losses conducted by independent insurance advisors. The type of insurance is considered by management to be sufficient to cover potential losses based on the nature of the business conducted by the companies. c. Operating Lease Contracts Subsidiaries Cia. Ultragaz, Bahiana, Tequimar, Serma, and Oxiteno S.A. have operating lease contracts for the use of IT equipment. These contracts have terms from 36 to 48 months. The subsidiaries have the option to purchase the assets at a price equal to the fair market price on the date of option, and management does not intend to exercise such option. Subsidiaries Cia. Ultragaz and Bahiana have operating lease contracts related to vehicles in their fleet. These contracts have terms of 24 to 60 months and there is no purchase option. The future disbursements (installments), assumed under these contracts, amount approximately to:
|  | Up to 1 year |  |  | Between 1 and 5 years |  |  | More than 5 years |  |  | Total |
12/31/2018 |  |  | 30,941 |  |  |  | 55,545 |  |  |  | — |  |  |  | 86,486 |
The subsidiaries IPP, Extrafarma, and Cia. Ultragaz have operating lease contracts related to land and building of service stations, drugstores, and stores, respectively. The future disbursements and receipts (installments), arising from these contracts, amount approximately to:
|  |  |  | Up to 1 year |  |  | Between 1 and 5 years |  |  | More than 5 years |  |  | Total |
12/31/2018 |  | payable |  |  | 220,988 |  |  |  | 686,108 |  |  |  | 547,412 |  |  |  | 1,454,508 |
|  | receivable |  |  | (84,332 | ) |  |  | (240,756 | ) |  |  | (253,997 | ) |  |  | (579,085 | )
The expense recognized in 2018 for operating leases was R$ 189,008 (R$ 160,465 in 2017 and R$ 101,330 in 2016), net of sublease income.

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