Abid Sher Ali is indeed Abid the Lionheart for he has gone after the most powerful of all power thieves. As he disconnects power to the powerful, he connects the State with good governance.

It is hard to imagine that a junior minister in the Sharif government would have the courage to challenge the most powerful in Pakistan. Nevertheless, Abid Sher Ali has done just that. He has ordered the disconnect of power supply to the Prime Minister’s Secretariat, President House, Supreme Court and federal government’s offices, including the offices of the Ministry of Water and Power, who have failed to pay their utility bills.

While the junior minister’s courage is worth the praise, a sustainable solution to power theft in Pakistan lies elsewhere. The defaulters, sooner than later, will have their defaulting privileges restored through executive orders.

A better approach is to follow the mobile phone’s pre-paid model where the rich and poor seldom default on their mobile phone bills. A smart metering system that permits electric flow only if the account holder has a positive balance prevents theft from taking place in cases where the cause is non-payment of bills rather than illegal access to the grid.

The latest news reports reveal that the Supreme Court came out of the dark in just 30 minutes after IESCO confirmed the receipt of the owed amount. Mr. Sher Ali though is adamant.

He claims that outstanding dues stood at 508 billion rupees of which 33 billion were added in the current fiscal year alone. News reports also suggest that almost 90 per cent of the power connections in some parts of Sindh and Khyber Pakhtunkhwa (KPK) are illegal. The uneven geography of power theft has been known for long and is well-documented.

Afia Malik, a researcher at the Pakistan Institute of Development Economics, has documented the energy crisis in Pakistan in an edited volume produced by the Lahore School of Economics. She tabulates the stubbornly prevalent high rates of transmission and distribution (T&D) losses across Pakistan.

Ms. Malik found that the highest rates for T&D losses were recorded for power distribution companies in Sindh and KPK. PESCO in KPK reported T&D losses of 36 per cent in 2011/12 (see the table below), whereas Karachi Electric Supply Corporation reported T&D losses of 29.7 per cent.

Source: Afia Malik, 2013. PIDE

It is true that not all T&D losses result from theft. Still, it is safe to assume that systems with greater than 15 per cent T&D losses are both inefficient and are plagued with theft.

Thomas Smith offers some guidelines in a study published in 2004. He considers distribution systems with less than 6 per cent T&D losses to be efficient. Such systems would have 1 per cent to 2 per cent in theft. Less efficient systems will report T&D losses of 9 per cent to 12 per cent. Inefficient systems will report T&D losses of over 15 per cent.

Mr. Smith’s analysis of 102 countries suggested that 15 per cent of countries reported T&D losses of 16-20 per cent and another 28 per cent reported much higher T&D losses 21-53 per cent. Data from Pakistan categorises most distribution companies as very inefficient or less efficient.

Pakistan is certainly not alone in power theft. In fact, the same study by Mr. Smith revealed that South Asia has the unique distinction of reporting the highest T&D losses. Compared to countries in the Western Europe where T&D losses were under 8 per cent, South Asian countries reported the highest T&D losses of 28 per cent (see table below). The T&D losses for Dhaka (Bangladesh) were around 40 per cent.

Source: Thomas B. Smith (2004)

Faisal Jamil, a professor at the NUST Business School in Islamabad, has been studying the electricity crisis in Pakistan. In a recent study, he discovered the adverse impact of electricity theft on power generation and shortages in Pakistan. His research showed that power crisis and shortages in Pakistan, to some extent, were caused by the theft of electricity. His study concluded that it was imperative to address the rampant electricity theft in order to manage the power crisis in Pakistan.

Recent advances in smart meters and statistical analysis have made it possible to identify theft in the systems.

A study in Arizona revealed some very interesting statistics. The regulators randomly selected a small number of meters from a total of 868,000 meters in use. The meters were given a thorough inspection that revealed that up to 1 per cent meters were tempered with. These results confirmed that in the efficiently managed systems, one can expect a small percentage of theft or attempted theft.

Smart meters are mostly tamper proof and can reveal to suppliers any attempts to tamper. At the same time, genetic algorithms and support vector machines can allow regulators to detect abnormal consumption behavior. Nagi and others used these techniques successfully in Malaysia to address issues related with power theft.

The solution to power theft in Pakistan though may lie in pre-paid electricity supply.

In such a system, the power will flow to only those customers whose accounts show a positive balance. Once the balance runs out, the flow halts. It resumes when the user adds more balance to the account. This eliminates the need for meter reading staff, who often collude with those who defraud the system, and the need to connect and disconnect users from the grid on account of non-payment of dues. The success of the pre-paid mobile telephone service in Pakistan offers the working model for a successful system where defaults are almost non-existent.

South Africa, in fact, has successfully implemented such a pre-paid electricity system. A major power distributor expanded its power network to households. It opted for a pre-paid system, which was very successful with those users who consumed less electricity. While there are many advantages of the pre-paid system, lack of theft to name one, the company, however, failed to initially anticipate numerous logistical challenges.

Still, the success of the pre-paid electricity supply in South Africa holds the promise for Pakistan where the pre-paid approach in combination with smart, temper-proof meters can help address the rampant theft of electricity.

In the meanwhile, the nation should applaud Abid Sher Ali’s courage. His efforts to subject all to the same standards makes the system fair and transparent. This will restore not just the power, but also trust in the system.

References:

Jamil, Faisal, 2013. On the electricity shortage, price and electricity theft nexus. Energy Policy, Elsevier, vol. 54(C), pages 267-272.

Malik, Afia (2013). Tackling the Energy Crisis in Pakistan: Moving the Economy Forward. Edited by Rashid Amjad and Shahid Javed Burki. Lahore School of Economics. Pp. 133-166.

Nagi, J.; Yap, K. S.; Tiong, S.K.; Ahmed, S. K.; Mohammad, A. M. Detection of abnormalities and electricity theft using genetic Support Vector Machines. TENCON 2008 - 2008 IEEE Region 10 Conference. Pp.1-6, 19-21 Nov. 2008.

Smith, Thomas B. Electricity Theft: a Comparative Analysis. Energy Policy. 32 (18) (2004): 2067–2076.

SSR Depuru, L Wang, V Devabhaktuni (2011). Electricity theft: Overview, issues, prevention and a smart meter based approach to control theft. Energy Policy. 39 (2), 1007-1015.

Tewari, D. D. & Shah, Tushaar, 2003. An assessment of South African prepaid electricity experiment, lessons learned, and their policy implications for developing countries. Energy Policy. Elsevier, vol. 31(9), pages 911-927.