CESL secures the lowest ever prices for 5450 e-buses under the FAME II scheme
Convergence Energy Services Limited (CESL), a PSU under the Ministry of Power has announced prices discovered for the biggest ever demand electric buses.
The Grand Challenge tender comprises demand for 5450 buses across five major Indian cities – Kolkata, Delhi, Bangalore, Hyderabad, and Surat. Prices discovered are the lowest ever and more importantly, at par with or very close to the operational cost of diesel buses. The lowest price discovered for a 12-meter bus is Rs. 43.49/km, and a 9-m bus is Rs. 39.21/km. This includes the cost of electricity for charging the buses.
Prices realized set a benchmark for public transport, the price point for which may encourage even the smaller cities to adopt electric vehicles.
Prices discovered represent electric mobility as a "service", a relatively new and emerging business model that makes it affordable for state transport undertakings to adopt electric buses. In an industry first, the Grand Challenge tender homogenizes demand for electric buses – making this a step closer to standardization of modern public mobility.
The value of the tender is over Rs. 5000 Crores. The buses are expected to operate around 4.71 billion kilometers over twelve years saving 1.88 billion liters of fossil fuel. This will result in 3.31 million tonnes of CO2e from tailpipe emissions, a major step towards mitigating climate change.
Buses will benefit from the central Government subsidy offered under the remodeled FAME II scheme administered by the Ministry of Heavy Industries. With the very low discovered prices under the Grand Challenge, a savings of approximately Rs. 361 Crores of national subsidy can be realized, which in turn may be utilized for additional buses.
The Grand Challenge constitutes best-in-class tender conditions, including standard specifications for buses, depots, and charging stations. The contract term is 12 years, with assured kilometers of 10 lacs per bus, and a credible payment security system. Special emphasis was paid to the requirement for domestic content, specifications for which are the highest to date. At least 25,000 people will be employed through this tender, of which 10 percent will be women. This does not include new employment created through new manufacturing facilities.
The process of homogenization started in July 2021, following a Gazette of India notification dated 11th June 2021issued by the Ministry of Heavy Industries. 9 cities are eligible to receive subsidies under the remodeled FAME II Scheme. Of these, 5 have participated in this tender. All major bus manufacturers participated in the tender.
Announcing the discovered prices, Mahua Acharya, MD & CEO, 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. The Grand Challenge will certainly encourage a faster transition to green mobility across the country while creating a synergy between private operators and state governments, she added.