Union Cabinet Approves ₹3,435 Crore ‘PM-eBus Sewa’ Scheme to Boost Electric Bus Adoption

New Delhi: In a major push towards sustainable public transport, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the PM-eBus Sewa-Payment Security Mechanism (PSM) scheme. With an outlay of ₹3,435.33 crore, this scheme aims to support the procurement and operation of over 38,000 electric buses (e-buses) across the country from FY 2024-25 to FY 2028-29.

The scheme is expected to facilitate the deployment of these e-buses, providing operational support for up to 12 years from their date of deployment. This initiative comes at a crucial time when most buses operated by Public Transport Authorities (PTAs) run on diesel or CNG, which have a detrimental impact on the environment. In contrast, e-buses are environmentally friendly and come with lower operational costs. However, the high upfront cost of procuring these buses and the low revenue generated from their operations has made it challenging for PTAs to adopt them.

To tackle this issue, the government is encouraging PTAs to adopt a Public-Private Partnership (PPP) model known as the Gross Cost Contract (GCC). Under this model, PTAs will not have to bear the upfront cost of purchasing e-buses. Instead, Original Equipment Manufacturers (OEMs) or operators will procure and operate the buses, while PTAs will make monthly payments. However, concerns over potential payment defaults from PTAs have caused hesitancy among OEMs and operators to engage in such partnerships.

To address this concern, the PM-eBus Sewa-Payment Security Mechanism ensures timely payments to OEMs and operators. In cases where PTAs default on payments, Convergence Energy Services Limited (CESL), the implementing agency of the scheme, will step in to make the necessary payments from the scheme’s dedicated funds. These funds will later be recouped by PTAs or State and Union Territory governments.

By encouraging private sector participation, the scheme aims to significantly reduce greenhouse gas emissions and the consumption of fossil fuels, contributing to a cleaner and more efficient public transport system. The scheme will provide significant benefits to all PTAs across States and Union Territories that opt to participate. In addition to its environmental impact, it is expected to bring substantial savings in operational costs for PTAs.