The Union Cabinet has approved the “PM-eBus Sewa-Payment Security Mechanism (PSM) Scheme.” This initiative is aimed at aiding Public Transport Authorities (PTAs) in procuring and operating electric buses (e-buses), with a financial outlay of ₹3,435.33 crore.

Under the scheme, more than 38,000 e-buses are set to be deployed between FY 2024-25 and FY 2028-29. These buses will receive operational support for up to 12 years from their date of deployment.

Currently, many PTAs rely on diesel or CNG buses, which contribute to environmental pollution. In contrast, e-buses offer a cleaner alternative with reduced operational costs. However, PTAs have struggled to adopt e-buses due to their high initial costs and lower revenue generation.

The scheme encourages the use of a Public-Private Partnership (PPP) model under the Gross Cost Contract (GCC) framework. This model exempts PTAs from bearing the initial capital cost, as the responsibility for procuring and operating the e-buses lies with Original Equipment Manufacturers (OEMs) or operators. PTAs will instead make monthly payments to the operators. However, concerns over potential payment defaults have deterred OEMs and operators from participating in such partnerships.

The PM-eBus Sewa scheme addresses this issue by ensuring timely payments through a dedicated fund. Should a PTA default on payments, Convergence Energy Services Limited (CESL), the implementing agency, will cover the payments using the scheme’s funds. These funds will later be recovered from the PTA or the respective state or union territory.