Lessons from across the border: Don’t raise power tariff, reduce line losses (II)

In this concluding part, we will discuss measures taken in India which over the last decade, seem to have worked.

In the first part of this article we discussed how the power crisis is bleeding the economy dry. And we spoke not just about the residential consumer but the impact on industry and the resulting unemployment.

In this, the concluding part, we will discuss measures taken in India which over the last decade, seem to have worked.

We were talking about the state of Andhra Pradesh when the state government undertook a round of ambitious reforms in 2000. These reforms aimed to strike at the heart of the problem and focused on four main points which have been enumerated below

Enacting new laws to prohibit theft

In June 2000, the government of Andhra Pradesh amended the Electricity Act of 1910 to make electricity theft a cognisable offence. Moreover, collusion by utility staff in the theft was also deemed to be a criminal offence. It needs to be mentioned that Pakistan already has such a law in place in the form of our own Electricity Act of 1910, sections 39 to 50 of which deal with such criminal offences. A drive was initiated against power theft under this law and in nine months ending May 30, 2010, Pepco caught 500,000 power thieves, as reported in some sections of the press as well. KESC also undertook a similar exercise in Karachi in the latter part of last year. However, the government of Andhra Pradesh went a step ahead and constituted special courts and tribunals for speedy trial of individuals and organisations accused of power theft. The utility service areas were divided into 24 “circles” to coincide with the 24 administrative districts of the state and special courts and police stations were setup in these areas to ensure detection and prosecution. The new anti-theft drive was pursued aggressively by the government. A number of cases were brought forward against politicians and political heavyweights as well, including a member of the legislature, which evoked trust in the government and displayed its resolve and seriousness in eradicating the menace of power theft.

Reorganisation of anticorruption function in the utility

The head of the anticorruption department within the utility was strengthened by making his role executive from advisory. Anticorruption department procedures were also simplified. Inspection officers provided an inspection report to the customer on the spot and carried numbered receipts to accept payments of fine. The state government also employed more than 2,000 inspection teams throughout the state to launch the control drive. A new tracking system was also employed to follow progress from inspection to fine payment or prosecution.

Reengineering business processes

Reengineering of business processes to ensure that they comply with globally established best practices is a hallmark of leading private companies around the world. Taking a cue from these companies, the government of Andhra Pradesh also changed things around at the Andhra Pradesh State Electricity Board (Apseb). A new management system, dubbed “customer analysis tool,” was devised which contained centralised information on all customers. This allowed the state utility to monitor staff’s performance against their collection targets. It also provided the management with focused reports to take corrective action. One such feature of the tool was its ability to generate risk profiles of customers and areas based on their payment history. Whereas the previous procedure was to raid entire neighborhoods on ad-hoc basis to detect theft, the new tool allowed focused inspections of defaulting customers and high-loss areas. The approach was effectively changed from “inspect and detect” to “detect and inspect.”

High quality metering

The World Bank reports that the state government installed more than 2 million high quality meters in 2 years, against a previous average of 600,000 old technology meters per year. In the initial phase, large industrial consumers were provided with high-quality, tamper-proof electronic meters and protectors were installed on transformers. Meter reading instruments were also provided to the staff so that monthly data could be easily downloaded. All district offices were linked to headquarters via satellite connections for timely transfer and monitoring of data. The utility staff was obligated to submit daily reports on connections regularized and fees collected.

In this regard, a step in the right direction has been taken by Pepco on the suggestion of Saleem Akhtar, MD Lesco, as reported in the media on January 1 this year. As per the decision announced at Wapda house, each distribution company across Pakistan is all set to install new electricity meters with a GSM communication module. According to reports, a pilot run of the new meters have already taken place at Shadbagh and Delhi Gate localities of Lahore where results have been encouraging. Power theft in these two localities reduced from 11 per cent to 2.4 per cent in Shadbagh and 13.2 per cent to 4.4 per cent in Delhi Gate, according to reports.

As a result of the reforms initiated by the Apseb, collections in that state, as per World Bank estimates, rose substantially to 98 per cent and line losses were reduced from 38 per cent to 22 per cent. The state utility was also able to regularise 2.25 million unauthorised connections. Disciplinary action was taken against 218 employees and cases launched against 87 employees. Moreover, more than 150,000 cases were pursued against defaulters compared to 9,200 in the previous 10 years. The results, it can be seen, are both impressive and sustainable. I will only reiterate that in the case of Pakistan, there is no quick fix to the power crisis. We find ourselves trapped in this morass as a result of years of mismanagement. But, a little foresight and leadership can go a long way in putting things right. As highlighted above, some steps in the right direction have already been taken. However, there are lessons to be learnt from our next door neighbors, which show that even short-term measures, taken in earnest, can have positive long-term consequences.

Published in The Express Tribune, March 7^th, 2011.