Public procurement accounts for 10% to 15% of global GDP, much of which is from cities. This represents a huge degree of purchasing power and procurement modelling and decisions can significantly affect the market and encourage provision of sustainable, resilient goods and services.  City-level bulk procurement and PPPs can reduce transaction costs and catalyse private investment and manufacturing. In the past few years, Santiago, Chile, has procured an impressive 455 e-bus and now has the largest city fleet outside of China.  It was achieved through a pooled procurement process, expanded over several years, combined with an innovative financial model under which electricity suppliers Enel and Engie acquired the buses from Chinese manufacturers BYD and Zhengzhou Yutong, leased them to the local operators, installed charging stations, and supply electricity.  The new e-buses created by the Enel X-BYD partnership, for example, are quieter, safer, have zero emissions at the point of operation and are cheaper to run; they can reduce operating costs by up to 70%, consuming only 70 Chilean pesos/ USD 0.083 per km compared to the 350 peso/USD 0.42 cost of a combustion engine vehicle and each Transantiago e-bus is contributing to a reduction in carbon emissions equivalent to that produced by 33 cars.  E-buses are also increasing the attractiveness of ridership thanks to air conditioning; better design; and a smoother, quieter rider experience than with the old buses.
Latin America and the Caribbean
Project size (range)
Project size (details)
PPP between the Ministry of Transport and Telecommunications (MTT) and six bus operators.
Year of financial closure
The Ministry of Transport and Telecommunications (MTT)
Partnership between Enel and Engie - the energy companies (Financing of bus fleet; e-depot construction; charging infrastructure) and NEoT Capital - Investor (Financing of the bus fleet)
Ministerio de Transportes y Telecomunicaciones (MTT)
Bus manufacturers (BYD, Yutong / Kinglong); and Bus operators (Metbus and Buses Vule/ STP/Redbus)
Other transaction participants
Ministry of Energy/SEC-CNE: Responsible for energy land capacity studies; authorizations for electricity grid modifications; regulation of the compliance of the e-depots standards
Reduced transaction costs: Financial leasing mechanisms can reduce costs for bus operators, which do not need to pay the up-front cost and have the flexibility to procure the asset at the end of the leasing period. Operators make regular payments to lessors, and lessors might receive a tax benefit if the buses are recorded as an asset on their balance sheets (instead of on those of the operators) (WRI 2019).
Several aspects underpinned the success of e-bus procurement in Santiago: 1. The operator’s quote for fleet provision is paid directly by the state to the company that provided the buses (the investor), as the operator transfers the monthly debt to the financial entity (AFT) in charge of collecting earnings and managing operators’ payments. The AFT subtracts from the income to the operator the amount corresponding to the leasing contract with the energy company and pays that sum directly to the energy company. This key characteristic allowed both Enel and Engie (the energy companies) to reduce their investment risk; and 2. The operators and the providers signed a provision contract, approved by the state, which specifies that no matter what company is operating the e-buses, the state guarantees the buses will remain within the system until the debt is paid. In this contract, the state agrees to the financial conditions and guarantees continuity of the service. Thus, the energy companies (or any other investor) have the assurance that they will be paid as the debt will be transferred to the next operator. This is another element of the PPP that reduces investment risk and ensures business continuity beyond the current private bus company in charge of the operation. Also, this characteristic worked as an incentive to introduce e-buses, as it allowed the buses to be funded in a larger time frame than that left for each operator as part of the system. This was translated into affordable monthly quotes (the current provision contracts have a 10–12 year extension). In this way, the current contracts acted as sufficient incentives for the introduction of e-buses in the public transport system of Santiago without the need to change any of their conditions.
Suitability for cities in low-and-middle income countries (detail)
Somewhat. Procurement and operation of e-buses are likely to be one of the highest impact shifts towards low-carbon urban transport in most LMICs. Affordability of e-buses can be a barrier to implement this instrument.