BSES inspectors' assault highlights struggle against power theft

New Delhi: Inspectors from Anil Ambani’s electricity retailer BSES Rajdhani Power Ltd entered a village near New Delhi last week hunting for tampered meters. Residents responded by beating them with iron rods.

The team was also stoned in the 21 May incident, a police report shows. Inspectors who visited another village in 2012 were bound and urinated on, according to two company officials who asked not to be identified as the information isn’t public.

The attacks show the task India’s power distributors face to stem theft contributing to blackouts and $17 billion in lost revenue annually, according to calculations by Bloomberg. Losses from stolen power, inefficient transmission and patchy metering pose a pivotal test for Prime Minister Narendra Modi’s pledge to boost energy output as a matter of national security.

“The key issue the power sector needs to address is the financial health of the distribution companies,” said Ratul Puri, chairman of Hindustan Powerprojects Pvt. in New Delhi. “Tariffs are too low and theft is too high. If you look at the power losses, 80% is theft.”

The government also requires distributors to sell power below cost in India. That forces retailers to increase debt to pay for supplies and curbs the funds flowing to power generation companies to scale up production.

Distributors, including Reliance Infrastructure Ltd’s units BSES Rajdhani and BSES Yamuna Power Ltd in New Delhi, owed Rs.14,100 crore to state-run generators as of 30 April, the Power Ministry estimates.

Assaults

The assault with rods occurred in the national capital’s Keshopur village, according to the police report. A BSES Rajdhani anti-theft squad was tied up and urinated upon in 2012 in a village near Najafgarh, about 20km west of central New Delhi, two officials at the company said.

Assaults have worsened since 2009, when a federal police team known as the Central Industrial Security Force (CISF) stopped accompanying inspectors on raids, both the officials said. CISF spokesman Anant Kumar Singh declined to comment.

BSES teams often come under attack from the unscrupulous elements, the company said in a statement, adding regular police officers now accompany inspectors and that theft leads to severe over-loading of the distribution system.

Insufficient electricity supplies are hurting efforts to spur economic growth from close to a decade-low and leave about 300 million people, or more than the combined populations of Brazil and Argentina, without electricity.

Debts

The government’s solution to the financial problems of the power sector was a $31 billion bailout of utilities, whose debts were so big and cash flow so small that they couldn’t provide a steady flow of electricity to homes and businesses.

India’s top court on 6 May ordered Reliance Infrastructure’s units, which supply power to the south, west and eastern districts of New Delhi, to pay Rs.700 crore of dues to NTPC Ltd, the nation’s biggest generator, by end of the month. State-run NTPC has the right to cut supply if payment isn’t received, potentially throwing parts of New Delhi, home to 16 million people, into darkness.

Reliance Infrastructure shares have gained 65% this year in Mumbai after dropping 18% last year on optimism the new government will introduce reforms in the sector. NTPC has increased 11%. Tata Power Co. Ltd, which supplies electricity to New Delhi and Mumbai, has risen 16% since January, matching the advance in the benchmark S&P BSE Sensex.

Daily outages

Power cuts are not uncommon in India, with some parts of New Delhi coping with six-hour outages daily when summer temperatures soar to 45 degree Celsius (113 degrees Fahrenheit).

“The transmission and distribution sector needs the same focus and attention as is being given to power generation today,” Shivanand Nimbargi, chief executive officer of Green Infra Ltd, which operates wind and solar power stations in India, said in an interview in New Delhi. “Importance has to be given to establishing a national grid with transmission lines of high capacity and reducing losses and theft in the distribution network.”

The new government under Modi wants to use renewable power, especially solar, to enable every home in the country to run at least one light bulb by 2019,” Narendra Taneja, convener of the energy division at the ruling Bharatiya Janata Party (BJP), said on 19 May. The last government under Manmohan Singh missed a 2012 target to provide electricity to all households.

Network losses

Modi, as chief minister of Gujarat, pioneered India’s first incentives for large-scale solar power in 2009. He ensured uninterrupted electricity supply to most parts of the state.

The nation’s supply network loses more than 27% of the power it carries because of dissipation from wires and theft, according to the Central Electricity Authority. That’s about 261,130 gigawatt-hour of power annually, enough to light up all of New York state for 21 months, and worth about Rs.1 trillion at an average electricity price of Rs.4 a unit.

The loss is 5% in Australia, 6% in China and the US and 16% in Brazil, according to the World Bank.

To curb theft, BSES started raiding premises across the national capital this month, sometimes in the dead of the night, according to a 13 May statement. The company registered more than 750 cases and discovered that about 3,330 kilowatts had been stolen in the past few days, enough to power more than 800 middle-class households in the capital. The raids will continue for three months.

“The distribution sector is the backbone of the power industry,” said Debasish Mishra, head of energy practice at Deloitte Touche Tohmatsu India Pvt. in Mumbai. “It deserves very serious attention.”