The Central government has asked states to replace thousands of ageing diesel-run public buses with electric ones, but state transport units say their finances have run aground because passenger numbers are down after the pandemic.
The Ministry of Road Transport and Highways (MoRTH) has asked state transportation units (STUs), responsible for procuring and operating buses, to replace over 32,000 old diesel buses with electric vehicles, several people aware of the development said.
Twenty-five STUs, according to a MoRTH estimate, own 32,062 buses that are more than 10 years old. According to a draft notification by MoRTH, permits for buses at the end of their life cycle of 15 years will not be renewed, meaning they will have to be scrapped.
To be sure, some states, like Delhi, already have rules in place on scrapping old vehicles.
Most ageing buses currently in use by STUs, barring Delhi, which has a fully CNG-run fleet, are BS-II or BS-III diesel buses which are not only highly polluting but also costly to maintain and run.
But STUs have been severely hurt by low utilization in the aftermath of the covid-19 pandemic when both intra- and inter-city public transportation took a big hit as commuters switched to personal mobility.
VC Sajjanar, vice-chairman and managing director, Telangana State Road Transportation Corp., said, “Switching to electric buses is a good scheme, but STUs have been in a bad shape after covid-19. We lose ₹4-6 crore each day because of increasing operational costs as diesel prices have constantly been shooting up. Electric buses will help reduce costs. We have nearly 2000 buses that are nearing their end-of-life term and need to be scrapped, but we can’t fund these orders when we are making losses – our operating costs right now are close to ₹20 crore, we make only about ₹12 crore or so. Even on a peak day at over 70% utilization, we make ₹4-6 crore in losses,” he said.
“We are requesting MoRTH to chip in and help STUs by way of subsidy support and viability gap funding. We will have to invest in setting up charging infrastructure and can use government aid here,” Sajjanar added.
Telangana recently put in an order for 300 electric buses in a tender run by Convergence Energy Services Ltd (CESL), a public sector unit, for aggregating demand for electric buses availing of the restructured FAME-II incentive scheme.
The CESL tender resulted in price discovery for e-buses that turned out to be lower or on par with the operational costs of running diesel buses, prompting NITI Aayog to mandate CESL to widen the exercise to a national level for 50,000 electric buses.
“STUs are indeed keen on scrapping these old buses – they are inefficient and polluting. But we also have to bear in mind STU financials. Now that we know prices are lower than diesel, I am sure we can design a suitable mechanism to help them,” said Mahua Acharya, managing director, CESL.
A senior MoRTH official said, “The draft scrapping notification has not yet been finalized, keeping in mind the financial constraints at STUs. But it is a given that they will have to replace old and inefficient buses.”
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