Power theft continues to hit Indian economy

Power theft in India is a serious issue

As per the Central Electricity Authority, over 27 pc of all power produced in India is either lost due to dissipation from wires or theft. That’s about 261,130 Gigawatt/hour of power annually- enough to light up New York for nearly two years. 

Power theft in India is a serious issue that the country has been trying to dealing with for years. The problem is found not just in the rural areas, but it is also rampant in the cities as well. Even though the government has achieved village electrification in all the villages in India, power theft is something that the government has failed to address adequately.

As per the Central Electricity Authority, over 27 pc of all power produced in India is either lost due to dissipation from wires or theft. That’s about 261,130 Gigawatt/hour of power annually- enough to light up New York for nearly two years. It is worth nearly INR 1 trillion at an average electricity rate of INR 4 per unit.

The capital of India is dealing with serious issues of power theft. Nearly 60 pc of all power theft cases in Delhi are reported from a handful of areas such as Najafgarh, Burari, Bawana, Seelampur, Seemapuri, Azadpur, and Mahavir Enclave, says a report. In the last five years, over 30,000 cases of power theft – having a connected load of around 40,000 KW- have been reported in Delhi. According to power experts the city discoms (distribution companies) lose somewhere between INR 10-15 bn annually because of power theft.

However, unlike in Delhi where most of the areas where power thefts occured were poorer parts of the city, in Kolkata, much of the electricity theft in Kolkata had been in posh areas,according to a report by the Calcutta Electric Supply Corporation (CESC), in 2002. A raid conducted by the CESC had exposed that most of the power stolen by domestic consumers in Kolkata occurred in upmarket residential areas like Park Street, Shakespeare Sarani, and New Alipore.

Impact of power theft on Indian economy

According to PricewaterhouseCoopers (PwC) India estimates, India’s power companies lose revenue on about a fifth of the electricity they supply, or about  USD 10.2 billion annually, due to problems including theft, meter tampering, billing issues and leakage due to faulty equipment. The World Bank  estimated that in 2011 power sector debt reached INR 3.5 trillion (USD 77 billion), that is 5 pc of India’s GDP. Of all the power generated in the country, around one fourth is either stolen or lost in transmission.

According to official figures, transmission and distribution losses at the national level in India were about 22.77 pc in 2014-15 and 21.81 pc in 2015-16. Some states incurred higher losses than the national average in FY15-16 and these include Madhya Pradesh (28.61 pc), Rajasthan (29.13 pc), Chhattisgarh (30.78 pc), Haryana (31.61 pc), Odisha (39.15 pc), Bihar (49.29 pc) and Jammu and Kashmir (50.06 pc).

The reasons behind power theft in India

The power system losses in India can be classified into two categories- technical and non-technical. According to a study report, technical losses are losses caused by actions internal to the power system and consist mainly of power dissipation in electrical system components such as transmission lines, power transformers, measurement systems, etc. On the other hand, non-technical losses (NTL) are caused by actions external to the power system, or are caused by loads and conditions that the technical losses calculation failed to take into account. These losses are essentially monetary or commercial losses.

There are mainly two forms of power theft in India. One is meter fraud (manipulating the electricity usage data) and the other is unmetered usage (where power is enjoyed for free). Political interference too is sometimes responsible for it. It is seen that in many parts of the country, power theft increases during elections. Since farmers form the majority of the country’s electorate, political leaders often promise them free or subsidised electricity in order to get votes. Also, most of the overhead electrical wires in India are still not insulated and that invites illegal hook-ups.

Measures by the government to curb power theft

The power distribution in India needs sweeping reforms if it is to support the country’s economic growth and help meet its goal of expanding access to electricity to all by 2019. With many states facing high aggregate technical and commercial (AT&C) losses, indicating operational inefficiencies, the Union Ministry of Power R K Singh has asked the states concerned to hand over the job of power distribution to private franchisees. The Minister in a letter to all states has warned that the Tariff Policy 2018 will mandate that no state will be able to pass on the losses incurred by distribution companies to consumers of electricity.

The central government has pledged an investment of billions of dollars for creating a smart grid infrastructure. In November, 2014, Prime Minister Narendra Modi announced USD 4 billion in funding for smart metering programmes. Additionally, over USD 8 billion has been budgeted for loss reduction programmes and dozens of projects are now underway across India.  The Union power ministry has suggested to states that their power distribution companies should raise “awareness among public at large on uses of electricity”, take up “extensive drive to curb theft of electricity and regularising illegal connections” and “focus on quality, reliability, quantity and timings of power supply in rural areas”.

A World Bank report has made three key recommendations to curb power theft in India-

1. Fully implement the Electricity Act mandates, especially those on competition and distribution, namely tariffs, open access, and performance standards.
2. Ensure regulatory autonomy, effectiveness and accountability for utilities and regulators.
3. Insulate utilities from state governments to prevent interference with internal operations.