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Respite for Steel & Cement Companies, FSA with CIL to Continue

The fuel supply contracts of steel and cement companies with Coal India Ltd (CIL) will not be discontinued for auction. This comes as a big relief to the companies as the government had earlier announced that all the coal supply agreements between Coal India and non-power firms will end on June next year.

Source:  ET

SNP Insights

Continuation of FSA , will ensure coal supply to non-power plants & hence productivity & profitability of end user plants wont be affected. Dis-continuation of coal supply & re auction, would result in desperate bidding process & cost appreciation of steel & cement production might occur which would dampen infrastructure development of the country.

Yet in order to bolster coal production & supply coal more effectively, Govt. should encourage commercial mining in the sector.

Source: SNP Infra Research