Coal India to terminate FSAs with customers who renege on contracts
The country’s national miner Coal India (CIL) is planning to terminate fuel supply agreements (FSAs) with its customers reneging on contracts, citing reasons of ‘low quality’ and ‘transportation cost’.
The company said such customers had paid a premium for securing coal through auctions in the past without complaints. But “now, with Covid-19-induced slowdown, when the demand for coal is low and the floor prices for coal relatively lower, some customers are moving away, citing reasons that are not reasonable,” it said.
Recently, there were reports that Vedanta, Jindal Steel & Power, and Hindalco Industries have terminated their supply contracts with CIL, citing low grade of coal, frequent changes in the grade supplied, and high transportation cost. The companies had got supply contracts with CIL through auctions held by the latter between 2016 and 2018.
