Largest tender for 8,000 electric state buses on cards

This is the second such tender being mooted by the government to encourage STUs to replace ageing, polluting diesel buses with electric ones. Earlier this year, Convergence Energy Services Ltd (CESL) – the state-run company handling the acquisition of EVs for central and state government departments – floated a tender to procure 5,580 electric buses. The tender was valued at about Rs 5,500 crore.

Tata Motors won the majority of the contracts to supply about 5,000 buses under the scheme. CESL has begun deploying 5,450 electric buses across five cities – Delhi, Kolkata, Bengaluru, Surat and Hyderabad.

CESL Managing Director Mahua Acharya told ET the scheme is based on an asset-light model that will enable STUs to deploy cleaner vehicles affordably and at scale.

“We are looking at mobility as a service instead of outright procurement to enable STUs to swap their existing fleet with electric buses. Their balance sheet will remain light. Also, aggregation of demand will bring in scale and help realise lower prices,” said Acharya.

Even without incentives, aggregating demand on a gross cost contracting model from across states helped realise 27% and 23% lower rates for electric buses compared to diesel-driven and compressed natural gas-run ones in the tender floated by CESL in Jan 2022. Various streamlining and risk reduction measures helped enhance competition, and led to the record low prices of Rs.39.21/kilometer for 9-meter e-buses and Rs.43.49/kilometer for 12-meter low-floor e-buses (including the cost of charging).

Acharya informed, “From various levels of indications, there is a demand for another 8000 electric buses currently. We have asked the STUs to evaluate the specifications required (7m/12 m electric buses), consult their board and formally intimate a considered demand.”

Overall, CESL is working with Ministries of Finance, Power, Road Transport, Heavy Industries, Urban Development and Environment to devise a holistic plan to get on-road about 50,000 electric buses by the end of the decade under the National Electric Bus Program. “Be it socially or environmentally, buses are an area of highest impact. Switching public transport buses to electric would substantially help in reducing the fuel bill,” said she.

Acharya said given the experience of the cost realised in the earlier tender, there is no need to justify the cost of electric buses any longer, which is cheaper even without subsidies. She added, “But STUs are not in the best of health, financially. They cannot increase fares. What we need are a bouquet of risk mitigation instruments, to secure payments and to ensure that the scheme is fail safe.”