Short circuit on power
New players are not going to spark an overnight change in New Delhi's history of chronic theft at the electricity company, writes Amrit Dhillon
DURING THE PAST few weeks, as power distribution in India's capital passed from government to private hands, shopkeepers have reported a spurt in candle sales, miserable residents have sweated through 10-long power cuts and allegations have been flying thick and fast that anti-privatisation unions are sabotaging the transition.
As teething problems go, they have been on a massive scale since July 1 when the two private companies took over distribution.
But even more surprising is the unrealistic attitude of New Delhi citizens. After 50 years of prodigious corruption, greed, and graft in Delhi Vidyut Board (DVB, the electricity board), they optimistically expect a miraculously better power supply in a few weeks.
Some are pointing a finger at DVB workers, saying they are deliberately not repairing faults or answering complaints from consumers out of anger that their days of making packets of money are over.
The suspicion is well-founded.
A tidal wave of unhappiness crashed through DVB's corridors when stricken employees realised that privatisation was inevitable. It has happened only after years of ferocious resistance from employees and dithering from the government. For years DVB has been known as one of the most corrupt organisations in India with most of the staff on the take.
Swirling around in this vortex of greed are the linesmen, officials, inspectors, meter-technicians, managers and, of course, New Delhi citizens who steal power. Studies show 60 per cent of DVB's power is stolen. This translates to up to nine billion units in volume and at least 25 billion rupees (about HK$4 billion) in revenue.
Only a tiny proportion can be put down to losses owing to technical difficulties. Almost all the loss is theft.
It has long been popular wisdom that Delhi's slum-dwellers are the culprits, stealing power directly from the lines overhanging their hovels. This ignored the fact that even if each slum was stealing 10 units a day, it would still account for only a fraction of the nine billion units lost every year.
Then new studies revealed the truth. Most of the power is being stolen by the rich and by small factory owners. The rich prefer to avoid perspiring in the maddening heat of an Indian summer by running several air conditioners in their homes. Rather than face hefty bills, they bribe DVB officials to fiddle the meter so that it shows only a tiny proportion of their consumption. The resulting bills are delightfully exiguous.
Or they get the linesman to ensure the supply bypasses their meter altogether. Owners of small factories in industrial areas are the biggest thieves.
On paper, these factories do not even have power connections. In practice, they steal power via high-tension cables. A factory operator who consumes 200,000 rupees worth of power every month is happy to pay 20,000 rupees to the DVB man to keep quiet. He goes home grinning, having earned three times his salary.
Sometimes the money-making methods are even more flagrant. A doctor in north Delhi who has always diligently paid his bills got the shock of his life recently when he received an electricity bill for 60,000 rupees for two months when it was usually about 4,000 rupees.
'They knew I was helpless. If the meter reading is 'correct', how can I prove anything?' asked Dr Ajay Ghosh.
'I went from pillar to post at DVB for months. In the end I was exhausted and paid up otherwise they would have cut the supply.'
With thousands of DVB officials having a vested interest in this rampant corruption, it was hardly surprising that for years the government failed to gather the political will to undertake privatisation.
But DVB sank so irretrievably into bankruptcy that the authorities had no choice.
From this month onwards, though power generation remains government-controlled, distribution is in the hands of two private companies, Bombay Suburban Electric Supply (BSES) and Tata Power. The obvious question is how they are going to tackle theft on this colossal scale in a culture where people feel no shame about stealing power. And what is more, since DVB's condition for agreeing to privatisation was that there would be no lay-offs, they are doing this with the same employees.
BSES and Tata Power run power distribution in Mumbai. On the day they formally took over earlier this month, both sounded optimistic.
'We have been around for 73 years in Mumbai and there everyone pays for power so there is no reason why we can't replicate the same success in Delhi,' Tata Power chief Adi J. Engineer said.
BSES executive J.P. Chalasani was equally positive: 'The first thing we have to do is make sure that bills are sent on time and that consumers pay up. Then we have to install meters for those who are using power illegally. We can't wave a magic wand in the first year. We'll need a lot of co-operation from the public and from our employees.'
The companies have committed to reducing theft by 17 per cent in the next five years in return for being allowed a 16 per cent return on their investment every year by the Delhi government.
Without this carrot, neither company would have been interested. As it was, hardly any private players came forward with bids, scared off by DVB's balance sheet from hell. The new companies will obviously be unable to recoup the cost of the power they buy from the paltry revenue left over after so much power has been stolen. Nor can they lift the tariff because honest consumers will revolt at paying more.
The government has given them a large loan, enabling them to sell power at subsidised rates for the first five years of inevitable losses. Pessimists say that if DVB, with all the coercive power of the state to draw on, was unable to curb theft, Tata and BSES have no chance.
Aware of the difficulties of curbing theft, BSES and Tata insisted on new laws. A draft law is ready that will allow them to check any electricity connection or carry out raids without giving notice and impose harsh penalties on offenders.
Even with such laws in place, the companies face the unenviable task of getting employees to do things such as reading meters accurately after decades of tampering.
Neither company is going to make any money for at least five years. If they eventually succeed in stopping theft their profits will be handsome.
In return, Delhi residents can expect better service.