Viable financing schemes must for transition to electrification of public transport | The Financial Express

Viable financing schemes must for transition to electrification of  public transport

CESL together with WRI has been contemplating speeding up the deployment of 50,000 electric buses in the country by 2030.

Viable financing schemes must for transition to electrification of  public transport
Acharya called for a need for a unified tender, considering the demand bucket and agreed on the fact that there exists an unprecedented demand, provided there is standardisation of demand and the payment conditions associated.

As the move towards more sustainable mobility gathers momentum, Convergence Energy Services (CESL), a subsidiary of the Energy Efficiency Services (EESL) together with World Resources Institute India (WRI) has been contemplating speeding up the deployment of 50,000 electric buses in the country by 2030. 

The Grand Challenge tender comprises demand for electric buses across five major Indian cities – Kolkata, Delhi, Bangalore, Hyderabad and Surat. And the prices realised set a benchmark for public transport, the price point for which may encourage even the smaller cities to adopt electric vehicles.   

The rationale behind the move is not just about being environment friendly, Mahua Acharya, MD & CEO, CESL insisted on the practicality of the ‘mobility-as-a-service’ business model. Indicating the lowest-ever prices being up to 27 percent cheaper as compared to the diesel-based buses, she explained that, “State transport undertakings benefit more from bigger tender buckets as that allows for lower price discovery for procurement and operation of electric buses in India.”

The State Transport segment has been reeling under severe fund shortages and Acharya highlighted that the need of the hour is to get in massive capital to bring about a transition to electric buses. She was speaking at the curtain raiser for INSIGHT 2022 on Twitter Spaces along with WRI India CEO, OP Agarwal and World Bank Land Transport Specialist Gerald Ollivier about how green financing might spark a sustainable public transportation system in India.

Acharya pointed out that public mobility financing schemes need a different approach. There is a need to bring different financing schemes on board – corporate financing, and structured financing, that can cater to the demand and provide well-suited services, she added.  

Commenting on the topic, Gerald Ollivier Lead Transport Specialist – India, World Bank said, “when we are looking at e-buses or electric three-wheelers, for that matter, the concept of shared mobility is what is being used to its maximum potential which would ultimately bring down the carbon emissions to 200 – 300 tonnes. However, this would require approximately Rs 7,00,000 – 14,00,000 crore of investments between now and 2030.”

“As we move to 50,000 buses, which is likely to require Rs 50,000 crore of funds, funding the viability gap between earnings and revenues will be a major challenge to address,” Ollivier reiterated.  

Acharya called for a need for a unified tender, considering the demand bucket and agreed on the fact that there exists an unprecedented demand, provided there is standardisation of demand and the payment conditions associated. 

Three factors that need redressal, according to Acharya are – “risk mitigation, regulatory architecture and proper alignment of the capital that would help bring all the stakeholders to the centre stage.” 

As per Om Prakash (O.P.) Agarwal, CEO, WRI, financing public mobility will not be a problem if we are innovatively looking for different ideas to work this out. 

“I am not looking at 50,000 but 500,000 electric buses. This is an opportunity to try different kinds of buses that will attract the ‘personal motor vehicle’ users.” 

Counting on the many benefits like app-based reservation, on-demand services, cleaner, greener, comfortable, and not so crowded kind of buses,  the user is keen on hoping on to the transition, Agarwal added. Highlighting the necessity of this change Agarwal explained that, “The revenue of passenger fares/subsidies alone are unable to meet public buses’ operating costs. All state transport undertakings own prime land. Monetising these land assets can address financing challenges.”

Emphasising on moving away from public agencies and restricting them as the controllers and procurers, there is a need to adopt the right business model which essentially is adopting the PPP (Public-Private-Partnership) model, which would go a big way in achieving the goal, Agarwal stressed upon creating a synergy between the government, private sector, and the industry. 

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