Push For E-Buses: Centre Asks State Transport Undertakings To Phase Out Old Diesel Buses

The Ministry of Road Transport and Highways (MoRTH) has asked state transport undertakings (STUs), responsible for procuring and operating buses, to replace over 32,000 old diesel buses with electric vehicles, a Livemint report said on Tuesday.

According to a MoRTH estimate, 25 STUs own a total of 32,062 buses that are more than 10 years old. Most ageing buses currently in use by STUs are BS-II or BS-III diesel buses which are not only highly polluting but also costly to maintain and run.

At the same time, the ministry had proposed a clutch of measures to ensure that vehicles, which are over 15 years old, stay off the road. A draft notification issued by MoRTH in 2021 has provision for non-renewal of bus permits at the end of their life cycle of 15 years, meaning they will have to be scrapped sooner.

Reluctance Of STUs

STUs are keen on scrapping these old buses — they are inefficient and polluting. But their reluctance to do so stems from the precarious condition of STU’s finances. Already reeling under poor operating margin, STUs have been severely hurt by low utilisation in the aftermath of the Covid-19 pandemic when both intra- and inter-city public transportation took a big hit as commuters switched to personal mobility, thereby, affecting their finances.

“Switching to electric buses is a good scheme, but STUs have been in a bad shape after Covid-19. We lose Rs 4-6 crore each day because of increasing operational costs as diesel prices have constantly been shooting up. Electric buses will help reduce costs," the Livemint quoted V C Sajjanar, vice-chairman and MD, Telangana State Road Transportation Corp, as saying.

STUs want the government to chip in and help them by way of subsidy support and viability gap funding. Also, they need support in setting up charging infrastructure required to run the electric fleet.

Transition To E-Buses

The transition to electric buses (e-buses) presents the opportunity to convert the maximum passenger kilometre (km) of travel to zero-emission transport in Indian cities and has the potential to yield a variety of benefits, including improved energy efficiency and air quality, along with longer-term climate change mitigation benefits.

Despite these benefits, the financial considerations, such as the higher costs associated with the transition to e-buses, have so far limited the pace of electrification of the bus transport sector. The Government of India (GoI) is working to address this and accelerate e-bus deployment; since 2015, it has been implementing the FAME subsidy scheme to facilitate this transition.

As part of the National Electric Mobility Mission Plan (NEMMP) 2020, the Ministry of Heavy Industries (MHI) formulated a scheme namely ‘Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles in India’ (FAME India) Scheme in 2015 to promote adoption of electric/hybrid vehicles (xEVs) in India. The phase-1 of the scheme was available up to 31 March 2019 with a budget outlay of Rs 895 crore.

About 425 electric and hybrid buses, as sanctioned under the first phase of the scheme are deployed across various cities in the country with government incentive of about Rs 280 crore. The Ministry of Heavy Industries had also sanctioned about 520 charging stations/infrastructure for Rs 43 crore (approximately).

West Bengal got the lion’s share of allotment with 80 buses, followed by 75 to Himachal Pradesh, 40 each to Indore (MP), Lucknow (UP), Hyderabad, BEST (Mumbai), and J&K.

Based on outcome and experience gained during the Phase-I of FAME India Scheme, and after having consultations with all stakeholders including industry and industry associations, the government notified Phase-II of FAME India Scheme on 8 March 2019 for a period of five years commencing from 1 April 2019 with a total budgetary support of Rs 10,000 crore.

Phase-II focuses on supporting electrification of public and shared transportation and aims to support, through demand incentives (subsidies), 7,090 e-Buses, 5 lakh e-three wheelers, 55,000 e-four wheeler passenger cars and 10 lakh e-two wheelers. In addition, creation of charging infrastructure is also supported to address the range anxiety among users of electric vehicles.

Demand incentives are an important component of the scheme which directly helps in demand generation of electric vehicles by way of reducing the cost of acquisition of such vehicles. It is available for consumers (buyers/end users) in the form of an upfront reduced purchase price of hybrid and electric vehicles, which is reimbursed to the original equipment manufacturers (OEMs) by government of India.

The largest outlay in the scheme is for demand incentives, followed by charging infrastructure and administrative expenditure. Out of total budgetary support, about 86 per cent of funds have been allocated for demand incentives so as to create demand for EVs in the country.

E-Bus Under FAME-II

Buses have been identified as a key segment for subsidies within FAME-II, with an allocation of Rs 3,545 crore for supporting 7,090 e-buses.

Electric buses receive a subsidy of Rs 20,000/KWh of battery capacity, double the amount for most other segments. The maximum incentive for a bus is pegged at Rs 50 lakh, with the scheme covering only buses with an ex-factory retail price below Rs 2 crore. Critically, FAME subsidies are provided only to state-run agencies, and not to private bus operators.

As part of this, the Department of Heavy Industry (DHI) had invited the expression of interest (EoI) from million-plus cities, smart cities, state/UT capitals and cities from special category states for submission of proposals for deployment of electric buses on operational cost basis.

Based on the responses received, the DHI has sanctioned 6265 e- buses to 65 cities/STUs/state government entities which includes 600 e-buses for intercity operations and 100 e-buses to Delhi Metro Rail Corporations (DMRC) for last mile connectivity.

Out of these 6,265 electric buses, supply order for about 3,118 electric buses has been issued as on 31 May 2021. Out of these 3,118 buses, 437 electric buses have been deployed; 160 buses are deployed in the city of Mumbai, 150 buses in Navi Mumbai, 30 buses in Goa, five each in city of Dehradun and Silvassa, 25 in Patna, 12 in Surat and 50 in Ahmedabad as on 31 May 2021.

However, there is a considerable lag between the time of placing supply orders and actual deployment, as tenders carry complicated conditions.

Demand Aggregation

To give a further push to clean mobility in public transportation, FAME India II scheme was redesigned in June 2021, whereby aggregation of electric buses was to be done moving forward.

The State-run Energy Efficiency Services Limited (EESL) is aggregating demand for e-buses under the scheme on OPEX Basis in nine cities with a population of more than 4 million — Mumbai, Delhi, Bangalore, Hyderabad, Ahmedabad, Chennai, Kolkata, Surat and Pune.