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Annual Auction of Coal for Unregulated Sector : Boon or Bane for Industries

News

The coal ministry is considering a proposal to allow Coal India to hold auctions every year for the unregulated sector, instead of every five years as mentioned in a draft released earlier this month, according to officials. 

Source: ET

SNP Insight

This mechanism may hold good for CIL but it may put stress on the industries in unregulated sector. With uncertainty on long term fuel supply companies may find it tough to project future way for production growth. And it also hard for companies to plan and invest in future expansion project when there is uncertainty over fuel supply. In future, if any case the production of CIL goes down then this may make it hard for small industries to compete with cash rich large industries. So, the ministry has to balance out the pros and cons before going forward.

Source: SNP Infra Research