India struggles with power theft

By Mark Gregory
BBC World Service international business reporter in Rohini, Delhi

How can you live on a few dollars a day? Well, it helps a little if your electricity is free.

Power theft means almost half India's electricity goes unpaid for

For slum dwellers in Rohini, a residential district in North West Delhi, power theft is almost a way of life.

There's little or no effort to hide it, and the method is simplicity itself: just find the nearest overhead power cable, sling a metal hook over it, then run a wire from the hook to the home.

The result: an illegal supply of free electricity that lasts until inspectors from the local power utility stage one of their periodic raids.

And when that happens, people simply all wait for a few hours until the inspectors have gone before reconnecting.

Christmas trees

The evidence for this is there for all to see.

Across a main road from the slum is a line of pylons carrying mains electricity cables. As well as the thick wires they are supposed to be supporting, most of the pylons have dense tangles of other much smaller wires sprouting off in different directions.

The proliferation of connections makes the pylons look a little like over-decorated Christmas trees.

These little wires run across the road siphoning off power from the transmission lines to homes and businesses located in the slum, which is a maze of little alleyways with children and animals running around.

Most households here seem to have an illegal connection to the grid. In many instances there are several unauthorised connections - and on occasion a legal one as well.

National problem

Similar scenes can be seen in many parts of Delhi. According to the latest official estimate, as much as 42% of the power supplied to India's capital disappears through "transmission losses", meaning it is consumed without being paid for. In effect, it is stolen.

Three years ago the problem was even more serious. Then transmission losses accounted for over the half the electricity distributed in Delhi.

Although Delhi has been dubbed the power theft capital of the world, the situation in other parts of India is little better.

There are no hard figures, but the best estimate is that somewhere between a third and half of the country's electricity supply is unpaid for.

Sangeta Robinson says the middle class is as much to blame

No other country suffers revenue losses on this scale. In China, Asia's other emerging economic giant, no more than 3% of the nation's power supply is lost to theft.

Spreading the blame

Slum dwellers' unofficial hook-ups are the most visible sign of India's power theft crisis, but there are yet bigger problems dogging the country's energy sector.

Meter tampering by middle class households seeking to pay less than they should costs still more, says Sangeta Robinson, an official with local utility North Delhi Power Limited, a subsidiary of energy giant Tata Power.

And yet another huge loss - albeit one which no-one can quantify - is electricity theft by industrial enterprises.

Giresh Sant, who works for an NGO called Prayas campaigning for more efficient and accountable government, says the problem is one of corruption - and a vested electoral interest in turning a blind eye.

No-one likes paying their utility bills, he says, so often politicians regard laxness about revenue collection as a vote-winner.

And opportunities for personal enrichment through corruption related to industrial power theft have given them, as well as civil servants and utility officials, further incentives not to rock the boat.

The political aspect is probably most blatant in rural areas.

At least 20% of India's power is consumed by farmers' irrigation systems. Frequently they either get free power or pay low set charges that bear no relation to the amount of electricity used.

The powerful farmers' lobby is hard for politicians to ignore in country where a majority of the population still makes its living from agriculture.

Power drought

But the pervasive electricity theft means India is chronically short of power.

Power cuts due to load shedding - which happens when demand exceeds supply - are a regular event in Indian cities.

And the problem is likely to get worse as rapid economic growth leads to greater energy consumption.

If the current 8% growth rate continues, India's energy planners reckon generating capacity will need to expand sevenfold over the next 25 years - and that means as much as $300bn on new power stations and transmission lines.

Giresh Sant says change is coming - but only slowly

Meanwhile, power theft means most of India's state run electricity companies are close to bankruptcy, collectively losing $4.5bn a year.

Private discipline?

Still, Giresh Sant can see change on the way.

A key problem to date, he says, has been an almost complete lack of effective auditing and accounting which could identify where the theft problems were worst.

But at last the power sector is starting to build the monitoring systems needed to make sensible decisions.

Recent legal reforms could also help. The 2003 Electricity Act made power theft a criminal offence for the first time, and made provision for special courts and police departments dedicated to cracking down.

Finally, there is the push to privatise. The idea is that private energy utilities will be better managed, more motivated to raise revenue - and less susceptible to political pressure than government-run enterprises.

Private-sector power generation plants have targets for reducing transmission losses built into their contracts.

The privatisation process is rather less advanced in power distribution. So far, only Delhi and the eastern state of Orissa have private firms playing a significant role.

Crackdown

But in Delhi, the private power firms say they are making progress.

India's two largest private power companies - Tata Power and Reliance Energy - have been awarded management control of supplying electricity to Delhi, working in partnership with state-run organisations.

Tata Power claims to have cut transmission losses in its patch from over 50% of the power supplied to little more than 30%.

The company recently secured its first criminal conviction for power theft, and has also launched several thousand civil legal cases against people it suspects of abusing the system in Delhi.

Tata is also undertaking an education campaign to convince consumers of the merits of paying for power.

And it is also offering an incentive: a scheme that gives slum-dwellers power enough for lights and a fan for a fixed price of 179 rupees ($4; £2.30) a month.

Some say, however, that even this is too expensive in relation to income, so India's campaign against power theft clearly still has some way to go.