Hop on board: Govt hopes privatisation will help electrify India's buses

The  BJP-led NDA government is pulling out all stops to achieve its all-electric dream for mobility.

Government bigwigs like Renewable Energy Minister Piyush Goyal have made it clear that they want clean vehicle to run on Indian roads and they want it to happen as soon as possible.

"We are going to make electric vehicles self-sufficient like Unnat Jyoti by Affordable LEDs for All (UJALA). The idea is that by 2030, not a single petrol or diesel car should be sold in the country," he had earlier said.

Such rush comes as no surprise as air pollution has become a menace which claims 1.2 million lives in the country every year, as per a Greenpeace India report.

A major reason for this is India's fossil fuel munching vehicles, of which most are not compliant with latest emission norms.

The government is exploring all its options to accelerate the adoption of electric vehicles.

As India's outdated buses are a major contributor to air pollution the centre now wants the beleaguered state transport undertakings (STU) to replace their existing fleet of diesel/CNG buses with pollution-free electric powertrains and have advised cities to privatise bus services.

The government hopes that privatisation would help bring in fresh funds and thereby improve mobility services.

The government recently launched an electric vehicle ecosystem program in Nagpur, the hometown of Nitin Gadkari, the Road Transport and Highways Minister through the public-private partnership (PPP) mode.

In the past, under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) STUs got financial support from the central government to buy and replace their aging fleet with new buses.

However, many states failed to utilize the funds allotted to them while many others bought the buses but did not use them optimally.

“Rolling stock (buses) should not be part of the working plans of the municipal corporations,” said Rajeev Gauba, secretary of the ministry of urban development, as reported by Business Standard. Several STUs are not able to run services without being loss-making.

Speaking to Moneycontrol, Vinod Dasari, Managing Director, Ashok Leyland said, “We deliberately exited some of the STU biddings which happened last year because they were not financially viable. We have decided to pursue only those contracts which are large enough capable of generating a sustained business.”

Gauba told Business Standard that the fleets could be run like metro services which are operated by private companies.

A special purpose vehicle (SPV) can be created in which municipal corporations could hold equity (and balance by private entities) to run these bus services.

“The finance of these projects will come from municipal bonds by rating agencies,” Gauba said.

The centre hopes that privatisation of STUs will bring bus manufacturers back into the market who had otherwise increasingly distanced themselves from bidding for STU contracts.