New Delhi: The opportunity to earn money by selling carbon credits, growing environmental awareness and the novelty value of buses fuelled by compressed natural gas (CNG) may have prompted some 14 cities to order hundreds of CNG vehicles, taking advantage of a one-time funding scheme offered by the Centre.
Green fleet: Low-floor CNG buses run by Delhi Transport Corporation. Ramesh Pathania / Mint
The cities that have placed orders for CNG buses include Visakhapatnam, Delhi, Indore, Ujjain, Thane, Navi Mumbai, Pune, Pimpri Chinchwad, Agartala, Tripura, Agra, Kanpur and Lucknow, according to urban development secretary M. Ramachandran.
Many of these cities are getting CNG vehicles for the first time, he added.
CNG is a substitute for petrol and diesel, and considered to be a more environmentally clean alternative to those fuels. Trading of carbon credits awarded for controlling emissions offers a potentially lucrative opportunity for cities that switch to CNG-fuelled public bus fleets.
“We have a carbon credit system that is under validation and if we go for CNG, it helps us in getting money,” said S.C. Garg, chief technical adviser for Indore’s city transport service. The municipality also reasoned that the prices of diesel, which is the preferred fuel for most bus operators, are likely to increase at a faster rate than the price of CNG. “Also, we can tell people to come and sit in a CNG bus for the first time,” he added.
“CNG has come some six months back. The government has tied up with some private companies for CNG pumps. We are also running around 100 taxis on CNG,” Garg said.
The city, which currently operates a fleet of 114 buses, has placed orders for 175 vehicles under the scheme offered by the Union urban development ministry earlier this year. Of the buses, 150 are CNG fuelled.
Similarly, the Ujjain municipal corporation has placed orders for 50 CNG buses. It is the first time that the city of 430,000 people is getting a government bus service.
A Visakhapatnam city administration official, who did not want to identified, confirmed that the city had ordered CNG buses for the first time.
“In Madhya Pradesh, only two cities—Ujjain and Indore—have CNG pumps. We have made a decision to make all public transportation (run on) CNG,” said Ujjain municipal corporation commissioner C.M. Shukla.
While the urban development ministry laid down several specific conditions and technical criteria for the type of buses that cities would be allowed to buy under the scheme, it didn’t require the buses to be powered by CNG.
The 14 cities are among at least 50 that have placed orders for around 8,000 buses, including diesel vehicles, under the scheme, which sanctioned nearly 14,000 bus purchases until March this year. For bus makers, it brought welcome business at a time when economic growth has slowed. Tata Motors Ltd won orders for about 4,800 of the 8,000 buses and Ashok Leyland Ltd for about 3,200 buses.
Contracts to maintain the public bus fleets offer an additional revenue stream for the companies. None of the orders have maintenance contracts bundled with them, an Ashok Leyland executive said. “These are still under negotiation,” said Rajive Saharia, executive director for marketing at Ashok Leyland.
A Tata Motors spokesperson said the firm had no information to share at this point.
In January, Ashok Leyland had bagged an order from the Delhi Transport Corporation (DTC) for 875 low-floor buses at a cost of Rs480 crore. The contract was bundled with a 12-year maintenance contract valued at Rs710 crore.
In the same DTC order, Tata Motors was asked to supply 1,625 low-floor buses costing Rs900 crore. The maintenance contract was valued at Rs1,300 crore.
More cities could switch to CNG-fuelled buses, increasing the size of the business opportunity for bus makers. Still, availability of CNG has been a problem in some cities because of a lack of distribution infrastructure.
“I know that Pune is looking at CNG buses, Surat is looking, Ahmedabad is looking. But to my knowledge, only Delhi runs a completely CNG fleet,” said O.P. Aggarwal, chief executive of Urban Mass Transit Co. Ltd and vice-president of the Institute of Urban Transport.
Aggarwal said the size of the fleet, especially in small cities, may not justify the cost of setting up CNG infrastructure. “If there is already a CNG distribution network, it is not a bad idea.” But to invest in a distribution network just for the bus fleet “probably doesn’t make sense”.