The Tamil Nadu government is in the process of acquiring 1,666 buses from Ashok Leyland, aimed at replacing the aging vehicles in the Tamil Nadu State Transport Undertakings (STUs) that have been in service for over 15 years.
These new buses are being procured at a total cost of ₹371.16 crore and are intended for deployment in various STUs across the state, including Villupuram (344), Salem (84), Coimbatore (265), Madurai (350), Tirunelveli (242), and Kumbakonam (367).
These buses are meticulously designed to provide exceptional passenger comfort and are equipped with advanced iGen6 BS VI technology, featuring a robust 147 kW (197 hp) H-series engine. The adoption of this advanced engine is expected to enhance safety, comfort, and significantly reduce the overall ownership costs. Currently, Ashok Leyland buses constitute more than 90% of the total fleet, with over 18,000 operational buses in the STUs.
The State Transport Undertakings collectively maintain a fleet of 20,127 vehicles, including 18,723 scheduled buses and 1,404 spare buses. In the 2022-23 fiscal year, these STUs reported a combined monthly loss of over ₹452 crore.
In response to this issue, the government has taken steps to retire the aging buses by introducing these new vehicles. The government has entered into an agreement with KfW, the German Development Bank, to procure 12,000 BS-VI buses and 2,000 electric buses over a five-year period. The funding arrangement involves an 80% share as an interest-free loan from KfW and a 20% contribution from the Government of Tamil Nadu.
The diesel buses are intended for deployment in seven State Transport Undertakings, excluding SETC, while electric buses will replace older vehicles in Chennai, Madurai, and Coimbatore. Factors such as rising diesel prices, wage increases as per the 14th wage settlement, increased DA for employees, and higher interest costs for obtaining additional loans for working capital, including salaries and statutory payments, have been impacting the STUs.
To support the STUs, the government has allocated funds in the form of share capital assistance, loans, and grants for the acquisition of new buses and the settlement of statutory dues for retired employees. In the Budget for 2023-24, an allocation of ₹8,000 crore has been made to the Transport Department for this purpose.
