Chennai, June 25 (AHN) The Tamil Nadu government has proposed floating a fresh tender to induct 500 electric buses for Chennai, Madurai and Coimbatore under the Gross Cost Contract (GCC) model after Germany-based funding agency KfW approved the cancellation of an earlier procurement process.

The previous tender, floated in 2024, envisaged private companies supplying and maintaining the buses for a fixed period, while state transport corporations would operate the services. However, the transport department sought to cancel the tender in March this year, and KfW, which is funding the project, approved the request on June 18.

With the cancellation now cleared, the department has submitted a proposal to KfW seeking approval to implement the project under the GCC model, under which private concessionaires will procure, own and operate the buses. They will also employ drivers and other staff, collect passenger fares and share an agreed portion of daily revenue with the state transport corporations.

Transport department officials said the proposal is awaiting KfW’s response. Officials believe the GCC model will significantly reduce the financial burden on transport corporations by eliminating major expenditure on vehicle procurement, maintenance, fuel and employee salaries.

The model has already been adopted by the Metropolitan Transport Corporation (MTC), which currently operates more than 600 buses under similar arrangements.

The operating cost under the existing GCC contracts is around Rs 77 per kilometre for non-air-conditioned electric buses and Rs 81 per kilometre for air-conditioned buses.

The MTC has also floated four separate tenders to expand its electric fleet. These include procurement of 20 double-decker air-conditioned electric buses, 1,300 standard air-conditioned electric buses and 220 smaller air-conditioned buses to strengthen first- and last-mile connectivity across Chennai.

However, the proposed expansion of the GCC model has drawn criticism from employee unions. K. Arumuganainar, general secretary of the CITU-affiliated Tamil Nadu State Transport Employees Federation, alleged that the policy amounts to gradual privatisation of public transport.

He argued that state transport corporations should continue to procure and operate buses directly, warning that greater dependence on private operators could weaken the financial health of transport undertakings in the long run, similar to what he claimed had happened in the power sector.

Meanwhile, MTC has also come under scrutiny after reducing bus operations across Chennai during the past week. On Tuesday alone, 162 scheduled services were reportedly cancelled. While officials attributed the cuts to administrative reasons, employees claimed shortages of drivers, conductors and spare parts were responsible. MTC currently operates 3,858 scheduled services every day across 686 routes.