FAME II: CESL discovers lowest prices for electric buses in its mega tender

• CESL's Grand Challenge tender comprises demand for 5,450 electric buses across five major Indian cities – Kolkata, Delhi, Bangalore, Hyderabad and Surat
• The lowest price discovered for a 12-metre bus is Rs 43.49/km, and a 9-metre bus is Rs 39.21/km

New Delhi: Convergence Energy Services Limited (CESL), a PSU under the Ministry of Power, has discovered the lowest prices in one of the largest tenders for electric buses in the world. "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," said the Ministry of Power.

"The lowest price discovered for a 12-metre bus is Rs 43.49/km, and a 9-metre bus is Rs 39.21/km. This includes the cost of electricity for charging of the buses," the government added.

CESL tender: Prices will make electric buses extremely competitive

Announcing the discovered prices, Mahua Acharya, MD & CEO of CESL, said, "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. The Grand Challenge will certainly encourage faster transition to green mobility across the country while creating a synergy between private operators and state governments."

Prices realised set a benchmark for public transport, the price point which may encourage even smaller cities to adopt electric buses. Prices 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 floated by CESL homogenises demand for electric buses — making this a step closer to the standardisation of modern public mobility, said the Power Ministry.

The value of the tender is over Rs 5,000 crore. The buses are expected to operate around 4.71 billion kilometres over 12 years, saving 1.88 billion litres of fossil fuel. This will result in 3.31 million tonnes of CO2 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 prices discovered under the Grand Challenge, a savings of approximately Rs 361 crore of national subsidy can be realised, which in turn, may be utilised for additional buses.

25,000 people to get employment through this tender

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 kilometres 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 percent will be women, said the Power Ministry. This does not include new employment created through new manufacturing facilities, it added.

The process of homogenisation started in July 2021, following a Gazette of India notification dated June 11, 2021 issued by the Ministry of Heavy Industries. Nine cities are eligible to receive subsidy under the remodelled FAME II scheme. Of these, five have participated in this tender. All major bus manufacturers participated in the tender, said the government.

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