NITI Aayog Introduces Model Concession Agreement for Electric Bus Fleets in Cities

The National Institute of Transforming India (NITI) Aayog has issued a model concession agreement for public private partnership (PPP) aimed at the operation and maintenance of electric buses in cities across the country.

The model concession agreement will help in developing city-specific concessions for introduction of electric buses in cities, enabling the government’s plan to push zero emission vehicles and achieve significant electrification of vehicles by 2030.

Under this model, the holder of concession will be required to incur the necessary capital expenditure (CAPEX) for the procurement of electric buses, and operation and maintenance infrastructure and the authority will incur operational expenditure on per kilometer basis.

The objective of the model concession agreement is to provide O&M efficiency of city bus fleets for the authority while ensuring bankability of the project for the private sector.

The operator will be responsible for the procurement of buses, O&M of buses, developing, as well as operation and maintenance of depots and real estate development on the depot sites. The contract period will be 16 years.

If the authority does not fulfill conditions to be met by it, then it will be liable pay to the operator damages in an amount calculated at the rate of 0.1 percent of the performance security for each day’s delay until the fulfilment of such conditions, up to a maximum of 20 percent of the performance security.

If the operator does not fulfill any criteria due to reasons other than Force Majeure (unforeseeable circumstances) or delay on part of the authority, then it will have to pay the damages. Such damage will be calculated at the rate of 0.25 percent of the performance security for each day’s delay until the fulfilment of such conditions, up to a maximum amount equal to the entire bid security. In case the operator hasn’t fulfilled his requirements even after the entire bid security has been exhausted, then the authority can terminate the agreement.

The operator will have to provide a performance security. The performance security will remain in force and effect during the contract period and will be returned to the operator after the termination of the agreement due to default on the part of the authority within one hundred and twenty days of the termination date, without any interest, after the deductions made for any outstanding dues.

The operator must achieve financial closure within one hundred and eighty days from the date of the agreement and in the event of delay, it will be provided with additional one hundred and twenty days after the payment of damages to the authority calculated at the rate of 0.1 percent of the performance security for each day of delay. Even after that if the operator hasn’t achieved financial closure, it will be provided with additional eighty days after the payment of damages calculated at the rate of 0.25 percent of the payment security for each day of delay.

Even after providing extensions, if the financial closure is not achieved by the operator, then the agreement will be terminated and the authority will encash the bid security.

Any dispute, difference or claim arising out of or in connection with this agreement will be decided by a ‘Board of Arbitrators’ comprising one nominee of each party to the dispute.

NITI Aayog has been advocating the adoption of intelligent communication in the form of electric vehicles in the country and has been a frontrunner in introducing pioneering ways to go about it.

In September 2018, the NITI Aayog had issued draft concession agreement for public-private partnership for the operation and maintenance of electric buses in Indian cities.

Previously, 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. Coupled with FAME, this agreement can revolutionize the EV sector in India.

Image credit: Flickr

Saumy Prateek Saumy is a senior staff reporter with MercomIndia.com covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.