The Hindu Business Line : Power theft short-circuiting growth

It is time the Government made power pilferage a cognisable offence, deserving condign punishment. The path to attracting private investment in infrastructure is paved with stringency of the regulatory regime, says G. SRINIVASAN.

A WEB of wires illegally tapping power... Rampant power theft has become the bane of the sector. — A. Muralitharan

At a day-long meeting on infrastructure, convened by the Planning Commission last week in the Capital, the Prime Minister, Dr Manmohan Singh, stated that the "bane of power sector seems to be the high transmission and distribution (T&D) losses which account for almost 40 per cent of the electricity produced. No civilised society nor a functional commercial entity could sustain losses on such a scale." That the overall infrastructure deficit in the country is partly due to the persistent power shortage is well-known. This can be mitigated if effective steps are put in place to end the rampant power theft that is plaguing the sector today.

Heavy losses

The Union Power Minister, Mr Sushil Kumar Shinde, told Parliament that based on State Power Utilities, only 69.87 per cent of the power available to them for sale was billed during 2004-05. This implies that 30.13 per cent of the energy available for sale was lost; this includes losses due to technical reasons, theft, pilferage.

The latest report of the Expert Committee on Energy headed by Planning Commission member, Dr Kirit S. Parikh, says that at the national level aggregate technical and commercial losses (AT&C) still exceeded 40 per cent in 2005. The impression one gets from these figures is that India's power supply system is not only inefficient but also corrupt and that down the line, transmission and distribution (T&D) losses, or AT&C losses if you will, are heavy.

Such high levels of inefficiency in commercial generation and transmission of electricity is what deters potential investorsto take advantage of the policy liberalisation.

Positive steps

Be that as it may, the situation is not altogether abject, as the Government has taken a series of steps in the recent period. They include metering of 11 kV feeders; energy accounting and auditing; strengthening the provisions pertaining to theft of power in the Electricity Act, 2003; upgrading and strengthening the sub-transmission and distribution system under the Accelerated Power Development and Reforms Programme (APDRP); and introducing the High Voltage Distribution System (HVDS).

It is also worth mentioning that distribution of electricity has been privatised only in the National Capital Territory (NCT) of Delhi, and in Orissa. Elsewhere, the job is done by the state-owned entities unbundled from the State Electricity Boards (SEBs) or, in some cases like Tamil Nadu and Andhra Pradesh, by the SEBs themselves.

Now, according to the provisions of the Electricity Act, distribution of electricity is a licensed activity. Under Section 86(1) of the Act, the State Electricity Regulatory Commissions (SERCs) have been entrusted the task of specifying and enforcing standards concerning quality, continuity and reliability of services by licencees.

Delhi's privatisation experience

The Government of NCT of Delhi privatised distribution in July 2002. The overall power supply position in Delhi has improved since and the energy and peak shortage has dropped from 1.9 per cent and 9.2 per cent in 2002-03 to 1.5 per cent 3.3 per cent respectively in 2005-06. But there have been instances of increased shortages during certain periods of the year, as was the case during April and early July.

But noteworthy is an assessment by the Delhi Electricity Regulatory Commission (DERC) that privatisation of distribution has been helpful. At the time of privatisation, the NCT Government was giving an assistance of Rs 1,200 crore every year to the Delhi Vidyut Board (DVB). This has since substantially come down to about Rs 138 crore in 2005-06.

The Delhi Government is now only spending on the capital expenditure plans of the generating companies and Delhi TRANSCO Limited, thus saving funds for other development schemes.

A positive development is that AT&C losses have come down from 50 per cent in 2002 to around 35 per cent (provisional) in March and the distribution companies (discoms) have achieved targets they entered into with DVB for loss reduction.

In the case of Orissa, where private distribution has been in vogue, the Orissa Electricity Regulatory Commission (OERC) contends that after privatisation of distribution, AT&C losses have come down from 56.06 per cent in 2000-01 to 45.11 per cent in 2005-06.

A caveat

No doubt, the Electricity Act, 2003, has removed entry barriers to different segments of the electricity business with the objective of promoting competition, which would lead to marked benefits to consumers through reduction in capital cost and the efficiency of operations. But in the case of the Delhi Vidyut Board, it was spilt into six entities, including three distribution arms, a holding unit, a generation and a transmission company.

BSES and Tata Power became the discoms with the former catering to the clientele in South, West, Central and East Delhi, while Tata Power covered North and North West Delhi. As each discom has its area carved out, there is no competition in power distribution in Delhi. And critics say that public monopoly was replaced by a private one. Experience has shown that even with this monopolistic distribution by each company in its area, the situation has become qualitatively better with instances of pilferage stemmed substantially.

Considering that power theft was rampant during the DVB period — out of the Rs 1,200 crore loss incurred by the DVB, Rs 900 crore was due to organised power theft — the privatisation of distribution without ensuring competition has not set a bad precedent.

The discoms in Delhi have achieved a feat in reining in rampant power theft. The latest newsletter BSES Yamuna, sent to clients along with their bi-monthly bills, claims that since 2002, its East Delhi outfit, BYPL, has successfully reduced power theft by a record 20 percentage points, from 63.16 to 43.6 per cent, a whopping five percentage points a year.

BYPL argues that electricity is a scarce resource — Delhi faces daily power shortages of up to 900 MW — with the situation unlikely to ease in the foreseeable future as the Northern Grid, the principal supplier of electricity to Delhi, is short of up to 10,000 MW.

China's power thief

The newsletter cited the punishment meted out to a power thief in China, an electrician from the Fujian Province. He was charged with helping residents, restaurants and companies steal electricity. The offender was caught red-handed while tampering with a meter in August 2005 and the court's probe found that he had helped filch electricity worth over 2,40,000 Yuan ($29,989). And the Chinese court sentenced the offender to 10 years rigorous imprisonment, while the local police separately fined the beneficiaries. The newsletter states that in India anyone caught stealing electricity can be imprisoned for up to three years or fined or both under the Electricity Act.

Tracking the thieves

With power thieves getting difficult to pin down, BYPL has secured the services of Central Industrial Security Force (CISF) to ensure the safety of its officials tracking such thefts. It is the first discom company in the country to get CISF personnel who can carry arms while accompanying the BYPL enforcement officials. They also have the remit to take the power thieves into custody before handing them over to the police for further action.

BYPL has set an example of how a private company can take a serious view of power pilferage and venal elements. It is time the Government made power pilferage a stringently cognisable offence, deserving condign punishment. The path to attracting private investments in infrastructure is paved to some distance by the stringency of the regulatory norms..

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