The National Institute of Transforming India (NITI) Aayog has issued a draft concession agreement for public private partnership (PPP) for operation and maintenance of electric buses in Indian cities. The NITI Aayog has undertaken an initiative to provide a model concession agreement (MCA) for introducing electric-bus fleet in cities for public transportation on PPP mode on operational expenditure (per km basis) model.

The draft is open for comments and suggestions up to October 4, 2018. A stakeholder’s meet will be organized at NITI Aayog, New Delhi on October 12, 2018, to discuss the same.

NITI Aayog’s model is based on international best practices. The draft has been issued with the view of providing cleaner, more efficient and affordable public transportation. The objective is to provide operation and maintenance (O&M) efficiency of the city bus fleet for the authority, while ensuring bankability of the project for the private sector.

The concessionaire (license or permit holder) will be required to incur the necessary capex for procurement of the e-buses and O&M infrastructure, while the authority will incur operational expenditure on per kilometer basis.

KEY HIGHLIGHTS

• The operator will be solely and exclusively responsible for all drivers, employees, workmen, personnel and staff employed for the purposes of implementing the project.
• Operator alone will be the principal employer in terms of the provisions of the Factories Act, 1948 and the Contract Labor (Regulation and Abolition) Act, 1970.
• Operator will bear the risk of loss in relation to each bus for the performance of its operation and maintenance obligations.
• Operator will provide for charging infrastructure at the maintenance depots for a specified minimum number of buses and provide adequate infrastructure for the metering of consumption of electricity at each of the individual charging stations.
• The authority will pay the lump sum amount due and payable for each of the funded works to the operator in four installments. Upon the operator completing about 30 percent, 60 percent, 80 percent and 100 percent of the respective funded works.
• If the contract is terminated before the completion of funded works, the authority will pay to the operator 75 percent of the fair value of the funded works undertaken until the transfer date, if such termination occurs on account of an operator default or a non-political event.
• 110 percent of the fair value of funded work will be provided if termination occurs on account of an authority default, a political event or an indirect political event.

Per the draft, the operator will be solely responsible for the procurement of electric buses. During the contract period, ownership of buses will remain with the operator and the operator will be responsible for all electric buses to be registered in the name of the operator.

Recently, the central government approved a subsidy corpus of ₹55 billion (~$0.78 billion) to be disbursed under the second phase of Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME) program. Incentives will be provided on the purchase of two-wheelers as well as three-wheelers and four-wheelers, including taxis and electric buses used in public transport to check pollution.

The model concession agreement can help change the way public transportation is conducted in India if properly coupled with FAME II.

Image Credit: DKMcLaren [CC BY-SA 4.0]