Moneycontrol
Apr 04, 2012 06:38 PM IST | Source: CNBC-TV18

Why signing FSA will not solve coal supply issues

A reluctant Coal India (CIL) is likely to ink fuel supply agreement (FSA) with power producers in a day or so. A presidential directive has been issued to CIL to commit minimum delivery of 80% of the assured supply to the power producers.

Why signing FSA will not solve coal supply issues

Moneycontrol Bureau


A reluctant Coal India  (CIL) is likely to ink fuel supply agreement (FSA) with power producers in a day or so. A presidential directive has been issued to CIL to commit minimum delivery of 80% of the assured supply to the power producers.


The goverment expects this step to provide relief to the power companies. However, Tom Price, global commodity analyst of UBS Equities feels, pushing Coal India to sign FSAs will not ensure adequate supply.


According to Price, Coal India would struggle to get coal to the market because a price incentive is not in place. The PSU has also been struggling on several fronts to scale up production due to hurdles like delay in regulatory clearances for new and expansion projects.

So, instead of pressing Coal India

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