Financing of buses remains an area of concern 

The push for public transport perhaps makes the availability of some cushion for private investors to foray into this area

By Sumana Sarkar calendar 14 Feb 2022 Views icon3224 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Financing of buses remains an area of concern 


City bus systems across India continue to be one of the key affordable modes of transport in the country. Even in a post-Covid scenario and with the realities of social distancing staring people in the face, most buses are running at full capacity. 

This is precisely why Mahua Acharya, MD and CEO of Convergence Energy Services (CESL), believes that the clear mention of urban development in the recently announced Budget “is a step in the right direction.” Yet, while the Finance Minister spoke about public transport in the context of sustainable mobility in urban areas, the lack of specific or pointed details is what the industry is concerned about. 

As per latest available data, more than 1.6 million buses are registered in India. The public sector operates 170,000 buses carrying roughly 70 million people per day. Despite the numbers, a lot of the EV conversation thus far has been focusing on two-, three- and four-wheelers while topics like the bus system and the state of roads are not dealt with as often. 

According to Acharya, while the Budget has referred to EVs in the context of mobility as a service, the financing of buses is an area of concern. “The big elephant in the room is the creditworthiness of state transport companies. In that sense, the push for public transport perhaps makes the availability of some cushion for private investors to foray into this area to some extent,” she says. 

The CESL chief explains the dichotomy in the context of city bus systems and the funding dilemma by highlighting that “the interesting and important aspect” in public transport is that the buyer is not a private company but the city itself. 

The concept of high-quality service for consumers is also a crucial aspect. “It is another way of saying that if you want great quality public transport to come in, private capital will have to invest in it. But someone has to finance that and that crowd will need/look for risk mitigation,” says Acharya.

She believes that a “little bit more specificity” around the financing of EVs could play a crucial role. While there is a reference to green bonds for blended fuel and climate action, it may not be adequate. 

“I would have liked to see dedicated pools of capital motivating a faster move towards EVs. It says the Government will promote thematic funds for blended finance. It would have been great if it said that electric mobility will be one of the thematic funds,” explains Acharya.

Procurement is another area that needs attention and close study. The Government has recently revised the procurement policies and “it is no longer the race to the bottom in terms of cost only”. The revised rules say use of transparent quality criteria decide costing valuation in complex setups. 

“Public transport is a complex exercise. Buying mobility as a service or battery as a service is a complex service. This cover therefore is a welcome move,” she says. While procurement and funding are not alien concepts, she hopes that people already working on it now have the legitimacy and use the Budget as a cover for visibility and push for quality.


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