ENHANCING EFFICIENCY IN THE GCC MODEL

The power of scale that comes with the GCC model is well known. Ashish Bhatia looks at the creases that could be ironed out for higher efficiency.

- Ashish Bhatia

The Gross Cost Contract (GCC) model with wet or dry leasing has made it possible for State Transport Undertakings (STUs) to decarbonise fleets, scale up operations and turn profitable. In the absence of the GCC, the latter (profitability) has been a grave concern for most STUs given the heavy up front investments required in running an owned fleet. The cap on ticket pricing as a not-for-profit undertaking makes it even tougher to realise profits. For STUs, the challenge albeit with the leasing, operational model lies in ensuring a higher uptime and safeguarding the jobs of on-roll employees, across the various types of implementations.

There is no doubt though that the Total Cost of Operations (TCO) of wet-leased ebuses make it an attractive agreement to enter. Union Minister, Nitin Gadkari cited the math recently. He said, “The per kilometre cost of running a diesel bus is Rs.115 compared to a tender received for Rs.39 per km for a non-AC bus and Rs.41 per km for an AC bus. With the government looking at initiatives like building an e-highway from Delhi-Jaipur, the capital cost could further come down to Rs.35 owing to lesser use of the lithium reserves.” The minister urged the industry to focus on proven technology, economic viability, availability of raw materials and marketability of the finished product if they were to benefit from the imminent transition.

IRONING THE CREASES