Delhi, 4 more opt for direct debit in state e-bus scheme

New Delhi: With the central government formulating a payment security mechanism to boost adoption of electric buses, Jammu & Kashmir, Punjab, Delhi, Haryana and Chandigarh have so far agreed on the direct debit mechanism under the scheme.

Under the payment security mechanism envisaged for the scheme, the government has worked out a direct debit mechanism (DDM) whereby in case a state fails to make monthly payments, Reserve Bank of India (RBI) will deduct the amount from their accounts and pay it towards the payment security mechanism (PSM).

“Only those states which agree to DDM will be able to participate in PSM. Some states have given consent, J&K, Chandigarh, Haryana, Punjab, Delhi.

The finance ministries of other states are considering the issue,” said one of the people in the know of the developments.

“We expect consent from other states, too, soon. About 15-20 states are likely to come on board,” said a person privy to the development seeking anonymity.

In August, the Union cabinet had approved the ₹57,613-crore PM-eBus Sewa scheme under the public-private partnership model. The government will be contributing ₹20,000 crore towards this initiative.

Under the 10-year scheme to augment city bus services, 10,000 electric buses will be deployed in 169 cities, prioritizing those lacking organized bus services.

The estimated cost for the scheme is ₹57,613 crore, with central assistance of ₹20,000 crore.

States will be responsible for running the bus services and making payments to the bus operators.

The central government will support the bus operations by providing a subsidy in the proposed scheme

The plan for a payment security mechanism comes in the backdrop of several e-bus manufacturers not willing to take part in the bids under the ongoing FAME II scheme due to some states not paying on time.

In order to set up a robust payment system, the guidelines of the scheme envisage the creation of an escrow account, which will consist of the central assistance, state share, daily farebox and non-farebox revenue, and any other relevant sources of funds. Payment to the bus operator will be made through the escrow account.

Central assistance will be given on the basis of the number of kilometres to be covered by the buses, and the incentive will be given for three months at a time.

The payment will be released to the operator by the bank on fixed dates as per the terms and conditions of the contract.

“State guarantee will be provided for payment of bus operations. States shall agree to the payment security mechanism (PSM) being developed by the government,” according to the guidelines.

Convergence Energy Services Ltd (CESL) is likely to be the aggregator for the scheme.

In the past few years, both central and state governments have emphasized on electric mobility and the government’s commitment to achieve net zero carbon emission has added momentum.

Although e-buses have been promoted under other schemes like FAME, they are yet to penetrate the market.

Under the ₹10,000 crore FAME-II, government aims to generate demand by way of 7,000 eBuses apart from electric two- and three-wheelers.