The Indian government launched the PM-eBus Sewa-Payment Security Mechanism (PSM) program, which establishes a Payment Security Mechanism Fund, to make it easier to buy and run electric buses. This initiative seeks to improve financial stability and reduce the risks of late payments for operators and original equipment manufacturers (OEMs) who have agreements with Public Transport Authorities (PTAs). The government intends to create a system for collecting money from state governments or Union Territories (UTs) and provide financial stability in the event that PTAs are unable to make payments on time.
The program’s main goals are to increase capacity, ensure operators receive regular compensation, encourage the use of technology for electric bus operations, and support PTAs in their skill-building. This strategy, which intends to deploy at least 38,000 electric buses, will benefit PTAs and the operators who take part in government-sponsored activities.
Purchasing e-buses in accordance with the program’s guidelines using the Gross Cost Contract (GCC) model is one of the prerequisites for PTA eligibility. PTAs are also welcome to participate as long as they adhere to a similar model approved by the steering committee. In order to reload the plan fund in the event that it runs out, PTAs must additionally apply for a Direct Debit Mandate (DDM) from the Reserve Bank of India. PTAs may pool their funds and buy buses from Convergence Energy Services Limited (CESL); if buses are bought independently, the steering committee must verify the PTA’s eligibility.
OEMs and operators who meet these criteria and have concession agreements with eligible PTAs are eligible for the program. Each bus will have payment security coverage under the scheme for a maximum of 12 years at a total cost of ₹3,435.33 crore.
To access the scheme fund, PTAs must set up an escrow account and manage payments for regular bills submitted by OEMs and operators. If there are not enough cash, operators can ask CESL to initiate the Payment Security Mechanism, which will result in the PTA being deemed in default and missing or delayed payments. CESL will manage a digital platform to gather and process these requests, ensuring operators have a secure and well-organized way to get money in the event that payments are not made on time.
If PTAs fail to repay the scheme funds within the specified time, CESL will request that the Reserve Bank of India activate the Direct Debit Mandate. This will enable the RBI to debit the relevant state or UT account and deposit the required amount, including any applicable late payment surcharge, into the plan fund. This ensures the long-term viability of the scheme fund and its capacity to continuously assist OEMs and operators.
