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Separate Sector Based Coal Reserve Auction May Strike Balance between Demand and Supply

News

The coal ministry will reserve coal for auction to unregulated sectors such as steel and cement from Coal India's additional production every year so that there isn't any desperate bidding by private firms in the upcoming auction of coal supply contracts.

Source: ET 

SNP Insight

Government’s decision to reserve coal for auction to unregulated sector may provide some relief to cement, iron and steel manufactures. As there will be designate coal supply for different sector and periodically review system in place. So, this may strike right balance between a sector’s coal demand and supply. This may restrain the industry participants to go for aggressive and non sustainable bidding which may help them to reduce coal procurement cost. The reduction in cost will reflect in low cost of production and may drive the industrial production growth in country. 

Source: SNP Infra Research