Electricity theft is a problem faced in many developing countries around the world and Pakistan is no exception. It results in high distribution losses for the distribution companies while lowering their recoveries which in turn reduce their cashflows.
The situation is much more severe in the cases where the DISCOs are government run due to more room for under the table accommodations by the staff of these companies. Even though empirical literature is almost non-existent on the subject when it comes to Pakistan’s context, a somewhat dated paper by the International Growth Centre (IGC) published back in 2012 on gives an accurate account.
The paper observes that when power is scarce, it results in collusion between the government, industry and agriculture which provides a political incentive to keep electricity supplies inadequate. Even though the paper was written based on the electricity dynamics in Uttar Pradesh, India, the facts are very similar in Pakistan.
Broadly speaking there are three methods of stealing electricity. One is the installation of “kundas” or illegal hookups which are unsanctioned connections to the grid. They are easy to remove when the linemen arrive to take the meter readings but in a lot of instances the power thieves don’t even bother taking them off. It all depends on who you are and how special a relationship have you developed with the local lineman and the grid officials.
The other case is by tampering with the meter to reduce the number of units being billed. In better performing DISCOS such as IESCO and LESCO, the former is difficult to do with the installation of digital meters but the low recovery areas such as SEPCO and HESCO might be more affected in this case.
In a recent meeting of the ECC, the government announced plans to install prepaid electricity meters to prevent electricity theft. However, this method will only be useful when it comes to the case of the metered consumers who regularly default on payments including state institutions. It will fail to address the case of illegal hookups to the grid which is a far more pervasive issue.
There is also the fact that previous government plans to install Advanced Metering Infrastructure (AMI) have hit a dead-end. The $5 billion project’s aim was to install smart meters to improve the billing and collection of DISCOs. Even though the idea was not without merit, the selection of the two relatively better performing DISCOs where distribution losses were low, for initial implementation did not make much sense.
In the long term, technological assistance such as AMI or installation of sensors on transmission lines are only a part of the solution. The other is the will of the employees of the DISCOs to crack down on electricity theft. In addition, the penalties of electricity theft should be made more stringent and their enforcement mandatory.
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