Indian bus makers shun government contracts over payment, labour concerns- sources

Jbm Auto

21/04/2023 11:06

By Aditi Shah and Sarita Chaganti Singh
       NEW DELHI, April 21 (Reuters) - India's large bus makers
including Tata Motors  TAMO.NS , JBM Auto  JBMA.NS  and PMI
Electro have not bid for the latest government contract to
supply nearly 5,000 electric buses because they fear not getting
paid on time, three sources told Reuters. 
    Some companies have also stayed away because of new labour
clauses in the tender documents, an industry source and a
government official said, slowing India's efforts to curb
vehicular pollution by electrifying its public transport. 
    Prime Minister Narendra Modi's government wants to deploy
50,000 electric buses countrywide over the next few years which
is estimated to cost $12 billion. To do this, it is aggregating
demand from state governments and issuing contracts or tenders
which companies bid for.
    In the first two tenders for about 11,000 electric buses the
government received bids from major bus makers including Tata,
JBM, Ashok Leyland  ASOK.NS , PMI Electro and Olectra Greentech
 OLEC.NS , which has partnered with China's BYD  002594.SZ .
    While there have been no payment issues so far, the state
transport corporations have previously delayed payments to bus
makers when procuring combustion engine vehicles, the industry
sources said.
    The third tender for 4,675 buses opened in January and
closed this week but got bids from only one Indian EV startup - 
   Eka Mobility owned Pune-based Pinnacle Industries, industry
and government officials said.
    Payments are typically made over a 12-year period and given
the poor state of state transport corporations' finances, this
is a big risk, said one of the industry executives involved in
the process. 
    "Until there is some kind of guarantee or mechanism in place
it will be difficult to participate," the person added. 
    Tata Motors, JBM Auto, PMI Electro and Eka Mobility did not
respond to e-mails seeking comment. 
    State-run Convergence Energy Services Ltd (CESL), which
issues the tenders, also did not respond to a request for
comment.
    In addition to the finances, another problem in the latest
tender was a "dry lease" under which the companies provide buses
to the state transport corporations and the bus drivers and
conductors are deployed by the state, the company officials
said. In earlier contracts, the companies provided the staff as
well. 
    "Drivers and conductors are considered as important an asset
as the bus and in the case of a dry lease contract, we have no
control over the asset," one company official said. 
    "Whether the driver would maintain the bus properly is a
great risk," the official added. 
    Most Indian state transport corporations are in poor
financial health because they are often forced to keep fares low
while being over-staffed. The corporations are controlled by
strong trade unions that resist privatisation and layoffs. 
    Indian banks are also reluctant to lend to electric-bus
makers for government tenders over concerns on recovery of dues.
    CESL has begun consultations with the e-bus makers to iron
out problems and has extended the timeline for them to submit
bids till month-end, the government official said. 

 (Reporting by Sarita Chaganti Singh and Aditi Shah)
 ((Sarita.ChagantiSingh@thomsonreuters.com;))