$10b loss leaves India in dark
A HUGE CHUNK OF POWER GENERATED IN COUNTRY IS STOLEN AS REGULATORS HAVE FAILED TO KEEP PACE WITH CHANGING TIMES
Adecade ago, Chandrakant’s fishing village in India’s financial capital Mumbai lived mostly by candlelight. What people did not have — electricity — they stole. It was easy enough to hook onto the two thin power lines that passed over the village and take a little for themselves.
Today, his settlement has moved up the feeding chain of Mumbai neighbourhoods and most residents have electricity. But the loose habits of the past persist. Residents still steal power on special occasions like weddings or funerals when more power is required.
An electrician like Chandrakant — who asked that his full name and that of his neighbourhood not be revealed because of his illegal activity — just hooks onto one of four main distribution lines in the village, with the quiet approval of local officials.
India’s power sector is lousy with thieves. Men like Chandrakant are the least of them.
As much as 40 per cent of the power generated in India is not paid for. The bulk of it is stolen.
If that seems unsustainable, it is.
India suffered the worst blackouts in history on July 31, which left over 600 million people without power. Investigators have yet to pinpoint the cause of the shut-downs. Early, contested reports suggest states were drawing more than their share of power. Scanty rainfall has driven up demand, as farm- pace with rising costs. In the most recent fiscal year, utilities lost an estimated Rs1.07 per kilowatt hour, up 40 per cent since 1999.
New Delhi is now contemplating a $21.7 billion bail-out for state utilities. The problem really begins in the ground, with coal. Coal accounts for more than half of India’s electricity supply.
Efforts to force Coal India — an inefficient government behemoth with a near monopoly on coal mining — to ramp up supply have foundered. Fights over land acquisition and stalled environmental clearances have made it difficult to open new mines. Power companies now are looking overseas for coal.
In the last four years, the cost to utilities of buying power rose 21 per cent — faster than ever before, according to PricewaterhouseCoopers — but they have been unable to pass that on to consumers because of price regulations.
Politicians currying favour with the farm vote have granted free or heavily subsidized power for agriculture, while idealists have fought to bring affordable light to the poor. Much of rural electricity is unmetered, creating opportunities for abuse.
Kameswara Rao, executive director of energy, utilities and mining at PricewaterhouseCoopers in India, said India should force states to raise rates in line with inflation and sell off part of their distribution grids to private companies.