India’s CESL launches tender for over 5,000 electric buses

Convergence Energy Services (CESL), a subsidiary of state-run Energy Efficiency Services (EESL), seeks to procure more than 5,000 electric buses in India. The energy transition agency has launched the tender under the Grand Challenge Scheme and targets five major cities.

Specifically, CESL wants to buy 5,450 electric solo buses and 130 electric double-deckers and deploy the vehicles in Delhi, Kolkata, Surat, Bengaluru and Hyderabad. The first vehicles are to arrive by July this year. On Twitter, CESL added, the initiative would expand to nine cities without giving a timeline.

According to official statements, the tender aims to homogenise and aggregate demand to facilitate procurement across the cities, essentially standardising the process. Mahua Acharya, the Managing Director and CEO of CESL, explained, “The real meaning of aggregation across cities under an OPEX model is actually homogenisation.”

In concrete terms, Twitter posts further specify that CESL would offer five transport operators the buses under #TheGrandChallenge as a service, where they will pay an amount per kilometre for twelve years without making an upfront payment. The tender volume is expected to be between 35 and 55 billion rupees (between 410 million euros and 650 million euros).

“This is the biggest ever scheme in the world – and is based on an innovative, asset-light model that makes it possible for STUs to deploy affordably and at scale,” she added.

Said state transport undertakings (STUs) are bus companies or networks in the hands of municipal governments and are charged with providing road public transport in India. Their association, ASTU, estimates their buses carry roughly 70 million people per day.

However, these STUs were not buying electric buses due to underfunding. Instead, buses were financed either by bus makers or financial institutions, so CESL.

The new tender and the Grand Challenge Scheme now is to help STUs move “towards a gross cost contracting model, wherein they procure service based on the terms and conditions defined in the tender document. Based on that, price is discovered in the market,” said Acharya.

The model is not entirely new to Convergence, a subsidiary of the state-owned Energy Efficiency Services Limited subsidiary, and itself a joint venture of public sector companies under the Ministry of Power, Government of India.

EESL recently closed a tender for 150,000 electric three-wheelers, at prices 18-20 per cent lower than the retail price. The tender was launched in August last year as reported.

For the challenge at hand, the CESL executive Acharya in earlier interviews had summarised CESL’s mission as “We intend to be a catalytic financier for EVs.”

timesofindia.com, business-standard.com, twitter.com (CESL), autocarpro.in (interview)