A $150-million payment security fund (PSF) for e-bus operators is to be announced, most probably on June 22, during Prime Minister Modi’s state visit to the United States. 

It is learnt that Global Energy Alliance for People and Planet (GEAPP), an arm of the Rockefeller Foundation, will bring in $135 million and the US government will contribute the other $15 million. 

The PSF can unlock $3.3 billion in financing, good for 13,000 e-buses.  

The fund will be administered by a special purpose vehicle called Financing Advancement of Sustainable Transportation (FAST). Mumbai-based investment bankers and asset managers, Truboard Partners, will be the advisors to the fund. 

Payment guarantee

Payment guarantee has been a sore point with e-bus tenders and is a stumbling block in fulfilling the National Electric Bus Program’s ambition to roll out 50,000 electric buses in the next few years. After two successful tenders, for 5,450 and 5,645 buses, respectively, the programme has slowed down, because of doubts over the ability of the State transport undertakings (STUs) to pay the bus operators.

(The bus operators run the buses on routes specified by the STUs, for a per-km fee. The fee, discovered through competitive bidding process, has been less than half of the per-km expenditure the STUs incur by plying diesel buses, which is about ₹90). 

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The e-bus tendering has so far been done by the Government of India company, Convergence Energy Services Ltd (CESL), which has acted as a facilitator. Other States, like Maharashtra, are also mulling to come out with their own e-bus tenders. CESL’s former CEO, Mahua Acharya, who oversaw the first two tenders, had then told businessline that the company would like a payment security fund with a corpus of about ₹1,000 crore.  

After leaving CESL in May (to join C-Quest Capital), Acharya continued to work for the creation of a guarantee fund. Her efforts have now yielded fruit, with GEAPP and the US government coming up with the $150-million fund. 

The fund will cover the first three months’ dues by the STU to the e-bus operator, in case the STU defaults — for a small fee of about 0.1 per cent. Along with the regular two-month escrow account, this is believed to be enough of a comfort to the e-bus operators. 

“The market for electric buses is at a critical junction and risk of non-payment, or delays, from the STUs remains a major issue,” Mahua Acharya, who is expected to be the Chairperson of a ‘supervisory committee’ of FAST, told businessline today. FAST is currently under development. “I am hopeful that this is hatched in the next three months,” she said.