CESL Gets Lowest Ever Prices for 5450 Buses under FAME II Scheme

Convergence Energy Services Limited (CESL), a PSU under Ministry of Power has announced today that it has discovered the lowest ever prices for the biggest ever demand for electric buses under the Grand Challenge tender. The tender, announced in January this year, had hoped to get the first batch of buses on the road by July this year. A smart, extensive bus system, which has been ignored across most Indian cities of scale until recently, is considered essential to find a long term solution to the issues of congestion, pollution and simply wasteful investments into four wheelers in the country.

The details of the discoveries in the tender are the following:

Tender Value: More than Rs.5000 crore

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Contract Term: 12 Years

Number of e-Buses plied for: 5,450 buses

Cities Participated: Kolkata, Delhi, Bangalore, Hyderabad and Surat

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Discovered Prices: Rs.43.49/km for a 12-meter bus

Rs.39.21/km for a 9-meter bus

Total Operation of all e-buses: 4.71 billion kilometers

Savings: 1.88 billion liters of fossil fuel

3.31 Carbon Dioxide emission

The Home Ministry says that the prices realized set a benchmark for public transport and it may encourage even the smaller cities to adopt electric vehicles.

The official statement says that the prices discovered represent electric mobility as a “service”, a business model that makes it affordable for state transport undertakings to adopt electric buses. For the first time, a tender homogenizes demand for electric buses. The Power Ministry says this is a step closer to standardization of modern public mobility.

Buses will benefit from the central Government subsidy under FAME II scheme. With low discovered prices, a savings of approximately Rs.361 Crores of national subsidy can be realized. This in turn could be utilized for additional buses.

Mahua Acharya, Managing Director & Chief Executive Officer, CESL said that the rates we have witnessed today make electric buses extremely competitive across the country. These rates are based on the terms and conditions of the tender and the sheer number of buses that cities have requested.  She held that the Grand Challenge will certainly encourage the faster transition to green mobility across the country while creating a synergy between private operators and state governments.

The Grand Challenge had set best-in-class tender conditions. This included standard specifications for buses, depots and charging stations. The contract term is 12 years, with assured 10 lakh km per bus, and a credible payment security system. Specifications for the domestic content were kept highest to date. At least 25,000 people will be employed through this tender, of which 10% will be women.

The process of homogenization started in July 2021, following a Gazette of India notification dated 11^th June 2021issued by the Ministry of Heavy Industries. 9 cities are eligible to receive the subsidy under FAME II Scheme. Of these, 5 cities participated in the tender and all major bus manufacturers offered their bid.

Under the ambitious Atmanirbhar Bharat initiative of the Central Government and as part of the Azadi Ka Amrit Mahotsav, the scheme includes completely 100 percent electric buses and aims to reduce the operating costs for cities, removing bottlenecks of procuring e-buses by State Transport Undertakings (STUs).

CESL intends to enhance its support to state governments in achieving their electric mobility targets as well as further build an infrastructure for electric mobility in the country.