India’s federal government has agreed to chip in $2.4B of a $7B scheme to roll out 10,000 electric buses across 100 large cities, India officials said on Wednesday.
The program for the e-buses will be implemented using the Public Private Partnership model. The goal of the scheme is to relieve the shortage of public transportation in some of India’s largest cities, and to do it without increasing the number of diesel-powered buses.
The announcement of the plan follows Indian Prime Minister Narendra Modi’s visit to the United States in June, where U.S. President Biden and PM Modi discussed decarbonizing the transportation sector and zero-emissions vehicles, as well as public and private financing of electric transportation. It also follows a separate meeting between Secretary John Kerry and India’s Cabinet Minister for Heavy Industries that specifically discussed electric buses and India’s troubles with getting private electric bus manufacturers to bid on India’s e-bus tenders, even when offered subsidies.
The reason for the private sector’s reluctance to spend money on state-run e-bus schemes is because the State Transport Undertakings (STUs) are so heavily indebted due to high operational costs that it poses significant financial risks of payment defaults.
E-buses are estimated to cost 5 times as much as traditional diesel buses, but under the previous scheme, the STUs wouldn’t purchase the buses—they would lease them from the bus manufacturers for the length of the contract. This means they would continue to pay the equipment manufacturers—and whether they can continue to pay while operating in the red has come private manufacturers balking. There have been payment issues already with traditional diesel buses.
The government is hoping that a fund set aside specifically for e-buses will quash some of those fears.
According to a report cited by Bloomberg, India must add 3 million more buses to its current fleet of 1.9 million to meet its booming public transportation demand.
By Julianne Geiger for Oilprice.com