Can India's Power Thieves Be Stopped?

To run his fan, lamp, and small television, Sikander strings a homemade wire hook over power cables outside his one-room New Delhi house. "The cables are right there, it's really easy to take it," says Sikander, 26, who uses only one name and earns less than $2 a day cleaning people's ears on the streets of the capital. "You have to be very careful when it rains because you can get electrocuted tying the wires together."

About one-third of the 174 gigawatts of electricity generated in India annually is either stolen by consumers or gets dissipated by the conductors and transmission equipment that form the distribution grid, says Power Secretary P. Uma Shankar. That's more than any other nation, according to a 2010 report by Deloitte analysts. In China the rate was 8 percent. The pilfering of almost enough power to charge California for a year lowers the annual income of Indian distribution companies by $16 billion. It also cuts the country's yearly economic output of $1.3 trillion by 1.2 percent, India's Planning Commission says.

Now the government is asking private companies, including Reliance Power and Tata Power, to take over the management of more of the power network from the state bureaucracy. The idea is that in collecting revenue from customers, the profit motive will drive the private companies to cut theft and waste in the grid more effectively. "In a government-owned company there can be corruption, which interferes with the task of reducing theft" as officials take bribes not to report thieves, Power Secretary Shankar says. "Private companies tend to have much better governance and have very clear targets."

The goal, Shankar says, is to halve the electricity lost by 2013 in a country where blackouts leave Indians sweating in summer temperatures of up to 115F. "Keeping the lights on is fundamental to economic growth," says Michael Parker, a Hong Kong-based senior analyst at securities and research company Sanford C. Bernstein. "Failure to do that guarantees subpar performance."

Tata Power and Reliance Power already jointly run the New Delhi electricity network. They have reduced the amount of power stolen by two-thirds. Yet BSES Rajdhani Power, the unit of Reliance Power that supplies western and southern parts of the capital, says it is still losing $2 million a day because of theft and the low, government—imposed utility rates it has to charge customers. If Tata and Reliance can tweak their rates, power will become a lucrative industry—and that is what they are lobbying for.

Prime Minister Manmohan Singh wants to secure $400 billion of investment for the power sector in the next five years and build up an additional 120,000 megawatts of capacity by 2017. India has missed every annual target to add electricity capacity since 1951.

On the front line of the struggle to stop electricity theft are enforcement officers like BSES Rajdhani's Akbar Basha, who patrols parts of western Delhi. Basha, 30, uses computer software that detects irregular patterns of power use. A nighttime surge, for example, may indicate a factory operating illegally in a residential area. In the last three years, Basha says he has been accused of sexual assault by a woman whose house he attempted to inspect, had his car keys stolen, and had his clothes ripped while confronting power thieves.

On Apr. 29, Basha's team visited an apartment occupied by Abhay Dev, 57, a hospital technician, where wires and a sliver of metal had been used to bypass the meter. Dev will be fined $340, twice his annual bill, unless the company accepts his claim that this was done by earlier tenants, according to Basha. "No one ever admits that they were stealing," Basha says on the street outside Dev's apartment. "People are always coming up with new technology. It's a constant game of cat and mouse."

The bottom line: India is turning to the private sector to do something about the theft of electricity, which reduces economic output by 1.2 percent per year.

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