State transport undertakings are likely to take to a public private partnership gross contract model for running electric buses, according to India Ratings and Research (Ind-Ra).

The Central government’s push through the Faster Adoption and Manufacturing of Electric Vehicles in India (FAME) policy and incentives through fund allocations has led to at least 4,580 electric four-wheeler vehicles, including electric buses, operating during FY21.

The contract structure of e-mobility projects resembles hybrid annuity model (HAM) for road projects. While the operator’s capability is an essential rating consideration, operating risk needs to be moderated.

The success of the model depends on the predictability and the certainty of income receipts. Given that the concession authority-cum-revenue paying counter party generally has a moderate to weak credit profile, creation of upfront deposits in the escrow account and average receivable days of the project play a crucial role in assessment of the project’s rating.

Gaining momentum

The Department of Heavy Industry (DHI) has approved disbursements of ₹895 crore under FAME-Phase 1 for EVs purchased during FY16-FY19. Additionally, it has sanctioned a total outlay of ₹10,000 crore under Phase 2 for propelling demand potential of e-mobility industry during FY19-FY22.

The drive for boosting the Indian e-mobility market by DHI has improved significantly under Phase 2 with 7,000 buses sanctioned compared with 425 Phase 1.

Six States lead transition

The top six States accounting for close to 55 per cent of the total electric bus sanctions under Phase 2 include Maharashtra (1,015), Gujarat (850), Uttar Pradesh (600), Tamil Nadu (525), Karnataka (400) and Delhi (400). The total charging stations authorised under Phase 2 is 2,877 as against 520 in Phase 1. The five States contributed about 50 per cent of approved charging stations under Phase 2 with Maharashtra (317), Tamil Nadu (281), Gujarat (278), Andhra Pradesh (266) and Madhya Pradesh (235).

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