Convergence Energy Services Ltd. (CESL), the government company that is tasked with facilitating e-mobility in India, expects its demand for ₹1,000 crore for a payment security fund for e-buses would be met by the upcoming Union Budget. 

Today, CESL came out with its third tender, for 4,675 e-buses. The previous tender was issued in September for 5,645 buses. Both of these were under the National Electric Bus Programme. The first tender was for 5,450 buses, which was finalised in February 2022. 

The CESL model is to aggregate demand from various States and issue one tender on behalf of the participating States. The winning bidders manufacture and run the buses on routes specified by the State transport undertakings for a per-km fee, which typically works out far cheaper than the per-km expenditure on a diesel bus. 

Major concern

A major concern of the bidders has been the question what is the guarantee that the State transport undertakings (STUs) will pay their dues. Most STUs are financially broke. 

In the first tender, Tata Motors bagged 5,000 buses, while Olectra and Volvo-Eicher got the rest. In the second, Ashok Leyland’s subsidiary, Switch Mobility, has emerged as the best bidder for 2,600 buses. Tata Motors kept out of the tender, apparently due to payment concerns. 

Payment security fund

In order to assure the bus companies of their due payments, CESL has asked the government for ₹1,000 crore to set up a “payment security fund.” In case a STU fails to pay its monthly dues, the bus company would be paid out of the fund for three months, CESL’s CEO, Mahua Acharya, told businessline today. 

CESL has also been working on securing carbon credits, the proceeds of the sales could go into the payment security fund. Acharya had earlier told businessline that each bus could potentially earn carbon credits a year; if the buses are charged by renewable energy, they could earn up to 55 credits a year. Prices of carbon credits vary both temporally and with the underlying project (and its impact on society), but roughly, a credit earned by an e-bus can sell for at least $10. 

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