E-bus vendors may receive central support if states fail to pay up

The absence of a payment guarantee method has been noted as a major worry by the private sector, while state governments have emphasized the issue of the unaffordability of electric buses due to the high prices given by suppliers.

The Centre is looking into ways to protect electric bus providers against payment defaults by state transportation undertakings, such as financial backing. There have been discussions around what can be done to mitigate risks faced by suppliers, a government official said, adding that new arrangements that can reduce financial risks have been discussed.

The decision follows the rejection of a 5,000 crore supply contract launched by Convergence Energy Services Limited (CESL). CESL is a subsidiary of the state-owned Energy Efficiency Services Limited (EESL).

"One option on the table is to establish a risk mitigation fund that would draw on multilateral financing," the official said. "Another approach allows bus operators to recover a fixed amount from the state each year regardless of bus fare revenue," he added.

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The absence of a payment guarantee method has been noted as a major worry by the private sector, while state governments have emphasized the issue of the unaffordability of electric buses due to the high prices given by suppliers.

As part of its bigger green mobility strategy, the Center is eager to deploy Electric Vehicles (EVs) for public transportation.

The type of assistance that can be provided will be determined following a conversation with all parties, according to the official. According to one official, the Center may also enlist state governments in this.

CESL will solicit offers for the delivery of electric buses and old diesel buses under the National Electric Bus Programme.

Following that, these new buses are supplied by CESL State transport utilities (STUs), who pay for the purchase and running costs over a long period of time with money obtained from bus fares. The STU sets the per-passenger bus fare in order to keep costs under control for end customers. The business sector believes it puts electric bus suppliers at risk and utterly alienates STUs.