State-owned Convergence Energy Services Ltd, a wholly-owned subsidiary of Energy Efficiency Services Ltd (EESL), on Tuesday said the prices discovered for the 6,465 electric bus tender were 29 per cent lower than what it costs to operate diesel buses.

This unified tender constitutes demand for electric buses from six Indian states & UTs – Delhi, Telangana, Haryana, Surat (Gujarat), Kerala & Arunachal Pradesh, a statement said.

This is the first tender under the National Electric Bus Programme (NEBP). The lowest price discovered for a 12-meter bus (intra-city) was ₹54.3/km, & 12-meter bus (intercity) was ₹39.8/km. For a 9-meter bus, the price discovered was ₹54.46/km and a 7-meter bus was ₹61.92/km.

The prices do not include a subsidy and are 29 per cent lower than what it costs to operate diesel buses, it stated. "This is a remarkable step in helping to transform our state transport authorities and build out a new market for electric mobility in India," Mahua Acharya, MD & CEO, CESL said in the statement.

She further added that this tender is a part of the central government's vision to deploy 50,000 electric buses on the roads in the next few years, whilst strengthening, modernizing and greening public transport in India. Prices realised set a benchmark for public transport, the price point for which may encourage even the smaller cities to adopt electric vehicles.

Emerging business model

This price discovery represents electric mobility as a "service", a relatively new and emerging business model that makes it affordable for state transport undertakings to adopt electric buses. Electric buses will be deployed both within city limits and on inter-city routes, with the latter being able to do 325 kms on a single charge.

The value of the tender is over ₹30,800 crore. The buses are expected to operate around 5,718 million kilometers over twelve years, saving 1,842 million liters of fossil fuel. This will result in 4.62 million tonnes of CO2e from tailpipe emissions, a major step towards mitigating climate change.

Under the Gross Cost Contract (GCC) model, the private operator brings the bus and operates it for a period of 10 and 12 years against predetermined conditions as set out in the tender. The STUs (State transport utility) on their part pay a fee for the bus service. CESL was mandated by NITI Aayog under the then CEO, Amitabh Kant, to implement a national programme of 50,000 eBuses.