CESL discovers lowest ever price of Rs43.49/km for city bus service under FAME II Scheme

Convergence Energy Services Limited (CESL), a PSU under the ministry of power  on Tuesday announced prices discovered for the biggest ever order for electric buses in the country.

The Grand Challenge tender comprises demand for 5,450 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 Rs43.49 per km, and a 9-m bus is Rs39.21 per km. This includes the cost of electricity for charging of the buses.
Prices realised 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 homogenises demand for electric buses – making this a step closer to standardisation of modern public mobility.
The value of the tender is over Rs5,000 crore. The buses are expected to operate around 4.71 billion km over 12 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 remodelled FAME II scheme administered by the ministry of heavy industries. With the very low discovered prices under the Grand Challenge, a savings of approximately Rs361 crore of national subsidy can be realised, which in turn may be utilised 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 lakh 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 per cent will be women. This does not include new employment created through new manufacturing facilities.
The process of homogenisation started in July 2021, following a Gazette of India notification dated 11 June 2021, issued by the ministry of heavy industries. Nine cities are eligible to receive subsidy under the remodelled FAME II Scheme. Of these, 5 have participated in this tender. All major bus manufacturers participated in the tender.
“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,” Mahua Acharya, MD & CEO, CESL, said while announcing the discovered prices. 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, she added.