NITI Aayog's draft concession agreement gives e-buses a sense of direction

In the absence of clear regulations, operators were going headfirst into the world of green vehicles

Much before winter pollution starts to choke Delhi’s public discourse, Chief Minister Arvind Kejriwal in July announced that the state will induct 1,000 electric buses into its fleet. Two months earlier, in May, adjoining Gurugram announced a similar plan to add 200 e-buses to decongest the city’s winter air.
 
In Hyderabad, meanwhile, Goldstone BYD, now called Olectra-BYD, entered the city with 30 e-buses as part of a consortium. Environment-friendly electric buses in public transport was envisioned much before the push for electric mobility in private vehicles picked up steam. But operators of e-buses are jumping in headfirst as there are no guidelines on concession agreements in the country.
 
The NITI Aayog, however, is now attempting to bring in some uniformity by framing a draft concession agreement for public-private partnership in operation and maintenance of electric buses in cities.
 
The draft tries to give shape to the gross cost contract model, which is based on per kilometre fee to the operator . The cost is calculated on a gross basis and not for a particular route. “Each state or city currently has different contract terms. At the same time, the state transport undertakings find it difficult to invest in purchase of new buses because of their financial health. This model ensures uniformity and takes electric mobility to a mass level,” says Naga Satyam, executive director, Olectra-BYD, a company that has co-branded with Chinese automobile manufacturer BYD.

 

To a large extent, the draft contract builds on the existing model of privately-run city buses in Delhi that bundle maintenance depots with running the bus service. Article 10 of the draft model agreement gives details of the land for depots which will be provided on lease by the transport or government authority to operators with a right of way on the property. The lease rights include development of real estate for commercial purposes.
 
Under the agreement, while the operator will have the licence, right of way and right to the depot site, it would be subject to the right to access by government employees for inspection. The land at the time of hand over has to be free from all encumbrances.

Going green: Components of the 15-year agreement

• Supply of e-buses 

• Operation and maintenance 

• Setting up of maintenance depots 

• Real estate development on depot sites 

 
According to Satyam, provisions on maintenance of depots are required in the case of e-buses since unlike the conventional fuel buses, these depots will need charging infrastructure that need to be properly maintained. “The operator should not blame the authority for not providing proper infrastructure,” he says.
 
Unlike the CNG- and diesel-run buses that can fill up tanks at retail outlets, electric buses will largely be dependent on the depots for charging. Hence, the model provides that operators maintain the charging systems as well. Varsha Joshi, principal secretary, road transport in the Delhi government, says the decision to pick either a slow or fast charging technology is left to the operator, as there are no standards on e-charging of vehicles currently.
 
Ankit Singhvi, founder, Mytrah Mobility, the mobility division of renewable power generator Mytrah Energy, and president, Electric Mobility Alliance (EMA), however, says inter-operable charging infrastructure that can work across different vehicles and power systems, is a better idea, given the varying customer needs. Alongside, operators should be responsible for delivery of complete bus service, he adds.

 

Singhvi says the model is an important iNITIative towards developing bankable contracts. One of the things that ensures that the revenue sharing is in accordance with the agreement is the provision of an escrow account where money flowing from ticket sales and other commercial revenue will be deposited.
 
The transport authority will be in-charge of both fare fixation and collection, but there will be a fixed order in which withdrawal can be made from the escrow account. Payment of taxes due on operator for the project gets the first right, then comes payments relating to construction of the project, O&M  (operation and maintenance) expenses incurred by operators subject to a ceiling set in financing agreements and the rest— O&M expenses incurred by the authority, monthly proportionate provision of debt service, all payments and damages certified by the authority and payable to it by the operator, monthly proportionate provision of debt service payments in respect of subordinated debt and finally the reserve requirement set forth in the financing agreements.

The opex model has a per kilometre fee which the operator will get. At the time of bidding itself, this fee will be quoted along with a guaranteed minimum kilometre. According to Satyam, city bus requires an average run of at least 200 km daily to be viable.
 
Singhvi says the model still has to go through a couple of iterations before it can meet varying requirements of cities. The draft model has similarity with the contract for Delhi Intermodal Transit System’s cluster buses, which according to Singhvi, has worked well for CNG buses, and, can be adapted for electric bus fleet induction, too. Under the Delhi model, only one operator is given a cluster of routes identified by the transport authority, which means one operator runs buses in one cluster.
 
The model also lays out explicit conditions for revision in fee. The operator will be entitled to that if the price per kilowatt hour (unit) of electricity consumed for the charging infrastructure varies by 10 per cent within a period of six months from the previous fee review. This means changes in the power tariff will be reflected in the fee paid to the operator.

 

The fee that currently private operators of CNG buses in Delhi are paid is also linked to fuel cost and is indexed to Consumer Price Index, says Joshi. 
 
According to Singhvi, there are currently open bids for over 1,000 electric buses and another 1,000 is in the pipeline. The biggest fleet of electric bus is currently operational in Himachal Pradesh, run by a consortium of Mytrah NN4Energy, BYD and Goldstone. “Electric buses are more suitable and cost effective than CNG buses. There should be concerted focus on their successful induction in transport fleets,” he adds.
 
Though e-buses have attracted significant interest from the state transport undertakings as well as bus makers, the greening of city transport will depend on the workability of the public-private partnership model and its attractiveness in the long term.