Government Announces Crackdown on Electricity Theft

ISLAMABAD: The government announced plans on Wednesday to launch a crackdown on electricity theft, which federal ministers said lead to combined losses of hundreds of billions of rupees and higher bills for the common citizen.

Background

Power Minister Muhammad Ali and Information Minister Murtaza Solangi made the announcement and outlined the measures they would be taking during a press conference in Islamabad.

It comes amid a “full force” crackdown planned against electricity theft across the country to tame mounting technical and commercial losses being faced by the power distribution companies.

Addressing the Issue

The interim government, facing the ire of agitated masses over inflated electricity bills in August, has been mulling its options — although limited — to placate the people who have been out on streets across the country.

“The background is that in our country, some domestic consumers steal electricity and others don’t pay bills,” the power minister said in today’s news conference as Solangi looked on.

He began by specifying that there are 10 distribution companies, or Discos, in Pakistan at present and K-Electric, which provides the utility to Karachi, has its own distribution network.

Extent of the Problem

“In every area, there are varying levels of theft and there are different percentages of recovery [payments],” Ali said, revealing that the annual loss due to electricity theft and failure to pay bills is Rs589 billion.

He said because of the electricity thieves and those who refuse to pay bills, others have to pay higher bills. “Until this is stopped, electricity prices will not come down,” the minister added.

Government’s Action Plan

He announced that the prime minister has issued directives to “crack down on this — end electricity theft and [ensure] recovery from those who don’t pay bills”.

The minister said the total loss in the Discos where recovery is relatively better than the rest of the country — in Lahore, Faisalabad, Gujranwala, Multan and Islamabad — amounted to 79 billion units, which amounts to a loss of Rs100bn out of billing of Rs3,044bn, estimated at 3pc.

The Discos in Peshawar, Hyderabad, Sukkur, Quetta and Azad Jammu and Kashmir had losses as high as 60pc, Ali said, explaining that his purpose was to inform the people which suppliers were recording higher losses.

“We have all the data on areas where electricity theft is more and where it is less, we will take steps on the basis of this data,” he announced.

For this purpose, the government is taking various steps, he said. “Where theft is less — up to 30pc — we will curb it through technological intervention.

“Where the loss is 30-60pc, we are considering whether we should involve the private sector in management,” Ali added. “For areas [where losses are] above 60pc, we will take enforcement measures,” he said.

Improving Discos’ Management

The minister also mentioned government plans to improve the management of Discos. “We are looking at their board of governors; we will make changes in those and the management.”

Collaboration with Provinces

The power minister said the government has communicated with chief secretaries and police chiefs in provinces and “we have their full support in implementing this [plan to curb electricity theft]”.

The measures also include reining in officials who aid the pilferage of electricity.

“We have prepared a list of officers who are involved in the theft,” the minister said. “They are being reshuffled and they will be removed from field jobs. We have sent the list to the Election Commission of Pakistan for their approval for the transfers.”

He further said the government will be constituting taskforces at the provincial level which would be led by home secretaries and include provincial energy secretaries, a federal government officer and police officers. Similar taskforces will be led by commissioners at the divisional level, deputy commissioners at the district level and assistant commissioners at the tehsil level.

The minister said the operations to curb electricity theft will be monitored by his ministry from Islamabad.

“We have established a control room and developed a dashboard at PPMC (Power Planning and Monitoring Company) to manage the performance of Discos on a day-to-day and hour-to-hour basis.

“We will monitor the operations from here but the implementation and execution will be carried out on ground at the provincial, district and tehsil level,” he explained.

Legislative Measures

The minister also announced that work was in progress on a new electricity theft control act, under which infrastructure of enforcement will be established across the country and special courts will be setup to hear complaints and give penalties.

“Our target is to finalise the draft of this ordinance in the next two to three weeks and send it for approval,” he said.

Future Considerations

In response to a question, the minister said work was also in progress on reducing capacity payments. But, he added, this cannot be achieved overnight and would take time.

Answering another question, he said the government was also considering the options of “provincialisation and privatisation” of Discos. “We will soon make a decision with the cabinet on which is the right way forward,” he added.

Privatisation as the Solution

Speaking alongside him, Power Division Secretary Rasheed Langrial said, “Eventually, our way is through privatisation.”

There was “serious thought” for an initial public offering (IPO) for three companies, he said, adding that Discos making massive losses because of low recovery rates — due to theft and line losses — would need work to become “privatisation ready”.