Union Cabinet approves Rs 34.35 billion PM-eBus Sewa scheme for electric buses

The Union Cabinet has approved the “PM-eBus Sewa-Payment Security Mechanism (PSM) scheme” with an outlay of Rs 34.35 billion. The scheme aims to support the procurement and operation of over 38,000 electric buses (e-buses) from FY 2024-25 to FY 2028-29, with a 12-year operational period from deployment.

Currently, most buses operated by Public Transport Authorities (PTAs) run on diesel or CNG, contributing to environmental pollution. E-buses, being eco-friendly and cost-efficient, are a more sustainable option. However, the high upfront cost of e-buses and low operational revenue pose challenges for PTAs.

To mitigate these costs, PTAs will adopt e-buses through Public Private Partnerships under the Gross Cost Contract (GCC) model, where Original Equipment Manufacturers (OEMs) or operators procure and operate the buses. To address concerns over potential payment defaults to OEMs/operators, the scheme ensures timely payments via a dedicated fund managed by CESL, the implementing agency. If PTAs default on payments, CESL will cover the payments from the scheme funds, later recovering them from PTAs or State/UTs.

This initiative aims to boost private sector participation in e-bus adoption, reduce greenhouse gas emissions, and lower fossil fuel consumption. All PTAs across States and UTs can benefit from the scheme if they opt in.