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Elimination Of Electricity Theft Is A Must For Survival Of The Power Sector, Shri R V Shahi, Former Secretary, Ministry Of Power

Elimination Of Electricity Theft Is A Must For Survival Of The Power Sector

Monday, May 21, 2007


Last week, with the consent of the Rajya Sabha the Electricity Amendment Bill was passed. With both houses of Parliament having passed these amendments, soon these will become part of the Electricity Act 2003. There are a few other amendments, but most important of these relate to controlling the theft of electricity. Theft of electricity is the bane of this industry. It needs to be mentioned that, inspite of several efforts in the last few years, even now the aggregate technical and commercial loss, on the national average basis, is around 40%. Obviously the tariff has to support the burden of such excessive losses. If we allow for a reasonable amount for technical loss, considering even the rural area electricity supply involving long LT lines, the loss on account of theft alone would be more than 20%. The figures would vary from State to State. There are States, and within the States there are several areas, where the losses are more than 50-60%. In these cases, obviously, the loss on account of theft alone would be of the order of 40-45%. Apart from financial losses, which the State utilities and other distribution companies suffer, the credibility of management of distribution utilities is in question because paying customers have to pay for even those who steal electricity and do not pay.

Toward the end of 2005, the Ministry of Power came out with the proposed amendments to Electricity Act on some other issues. These were mainly concerned with (i) Cross subsidy and (ii) Role of both and Central and State Governments in the matter of rural electrification. This was in response to the suggestion of some of the constituents of the UPA for reviewing certain provisions of the Electricity Act. Cross subsidy and Rural Electrification emerged as their main concern, apart from others. But when these amendments were proposed for consideration and approval by the Union Cabinet, while according the approval, the Cabinet desired that Ministry of Power should come out with its proposal on amendments and other administrative measures that are required to control the theft of electricity. The enormity of this problem and the impact of it, on the power sector, as perceived and experienced at the highest level of the Government could be appreciated from the fact that such a direction, aimed at formulation of specific legal and administrative stipulations, was given. The Cabinet also decided that a Group of Ministers chaired by the Hon'ble Home Minster would examine the proposals prepared by the Ministry of Power and make their recommendations.

Accordingly, the Ministry of Power started working on the proposed amendments and on suggestions for other administrative actions which may be necessary to be put in place for control of theft of electricity. During the process of this exercise, the experiences of various States were collected. Some of the states which have done very effective work on this front include Andhra Pradesh and West Bengal. The Assembly of West Bengal had passed a Bill as State amendments to the Electricity Act 2003. These amendments provided for a number of strict measures to control this menace of theft of electricity. It may be relevant to mention that the actions initiated by the West Bengal Electricity Board and West Bengal Government have yielded good results. It is one of the very few States in the country which turned around during the 2005-06 and started making a modest profit. The results achieved by Andhra Pradesh on controlling overall aggregate technical and commercial losses have been remarkable. Gujarat is another state where good results have been achieved. During the course of last two years, while implementing some of the provisions of Electricity Act which related to actions on theft of electricity, a number of suggestions were received from various state utilities and also from private distribution companies. In a few cases, some court judgments also have necessitated review of certain provisions of law so that gaps and ambiguities could be properly addressed.

The proposals were discussed in three meetings of the Group of Ministers. The Group of Ministers finalized the proposed changes in July 2006 and finally the Cabinet approval was accorded in December 2006.

The amendments approved by the Parliament would have far reaching positive results. The following specific amendments aim at elimination of theft of electricity.

  1. Section 50 of the Electricity Act provides for grid code to be specified by State Regulatory Commissions. In this section, it has been provided now that the Commissions shall also specify, in the Grid Code, measures for preventing tampering. It is well known that one of the most important ways in which theft of electricity is committed is by way of tampering of electricity meters. Proper follow up and implementation of this amended provision by the commissions and utilities could yield good results.

  2. Section 126 of the Act provides for provisional assessment for payment of electricity charges in such cases where the consumer is indulging in unauthorized use of electricity. This provision has been made more specific and stringent so that effective order is passed within thirty days for payment of charges as provisionally assessed. Also, it has been added in sub section (5) that assessments shall be made for the entire period during which such unauthorized use of electricity has taken place. In case of uncertainty the period has been increased to 12 months as compared to the present provision of 3 months. Also, the amount of assessment shall be computed, as per section 50(6), at double the tariff rate and not at one and half times as presently provided. Further in the definition of unauthorized use of electricity a new clause has been added in section 50(6) to include the "usage of electricity for the premises or areas other than those for which the supply of electricity was authorized".

It needs to appreciate that in absence of these specific provisions, many consumers were taking advantage of the loose ends and were indulging in theft. It was observed, as a common practice, that many consumers would use electricity in other premises by extending the line from where authorized connection has been taken. The amended provision will be adequate to handle this problem. I recall, in Orissa, in the year 2001, during one of the inspections, it was found that from a Kutir Jyoti connection (i.e. one point connection for BPL families), a petrol pump and a rice mill had been using unauthorized supply. There are number of examples of highly peculiar and innovative ways of theft of electricity. Just a couple of year back, in Delhi, it was found that in the basement of a house, a small factory was being run. There are several such examples. No wonder, in Delhi which even though it has negligible rural and agricultural connections, the losses, even now after 5 years of privatization, losses are in the range of 30-35%, though much lower than 50-60% prior to privatization in 2002. Most of it is theft.

  1. Under Section 127 a very important provision has been made that no appeal against an order of assessment shall be entertained unless half of the assessed amount is deposited. Earlier the provision provided for only 1/3 of the amount. The provision aims at discouraging unauthorized consumption that is theft.

  2. Section 135, contains the main provisions on defining what constitute theft of electricity as also prescribes fine and imprisonment upto three years. A number of new provisions covering various types of theft have been made. These are;

  1. tapping of electricity through cables, wires or service facilities of a licensee is treated as a theft. What has been added is that tapping could be not only from wire etc. of licensee but also of the supplier.

  2. use of electricity through a tampered meter has been specifically provided as a theft.

  3. use of electricity for the purpose other than for which the usage of electricity was authorized has been specifically provided as a theft.

It may be necessary to explain that many consumers take connections for domestic purpose for which the tariff is comparatively less and have been using the electricity for commercial and in some cases even for industrial purposes. This amendment will be able to cover a large chunk of theft.

  1. Some of the new provisions which have been added in section 135 are as follows:

  1. In the event of second and subsequent conviction of a person where the load abstracted, consumed, or used or attempted abstraction or attempted consumption or attempted use exceeds 10 kilowatt, such person shall also be debarred from getting any supply of electricity for a period which shall not be less than three months but may extend to two years and shall also be debarred from getting supply of electricity for that period from any other source or generating station. This will work as a deterrent for those who thieve electricity because for three months such consumers cannot be allowed to get power from anywhere.

  2. The licensee or supplier, as the case may be, may, upon detection of such theft of electricity, immediately disconnect the supply of electricity. In absence of such a provision in law, a feeling prevailed among the thieving consumers that they can merrily go on.

  3. Of course, since it is a harsh provision, only such officer of the licensee or supplier, as authorized for the purpose by the Appropriate Commission or any other officer of the licensee or supplier, as the case may be, of the rank higher than the rank so authorized shall disconnect the supply line of electricity. This rider will balance any likely misuse of this provision by the licensee or the supplier of electricity.

  4. To make it further clear and effective, it has been provided that such officer of the license or supplier, as the case may be, shall lodge a complaint in writing relating to the commission of such offences in police station having jurisdiction within twenty four hours from the time of such disconnection.

  5. The licensee or supplier, as the case may be, on deposit or payment of the assessed amount of electricity charges in accordance with the provisions of this Act, shall, without prejudice to the obligation to lodge the complaint, restore the supply line of electricity within forty eight hours of such deposit or payment. This relief for consumers is again to ensure that if payment is immediately made, power supply is given. Of course the legal proceedings shall continue.

  1. Section 150 of the Act deals with punishment to those who abet an offence (theft under the Act). Punishment has been provided in section 135 of the Act, which has been further strengthened as discussed earlier. A new provision has been made in section 150. Permit or authorization of any person, who acting as an electrical contractor, supervisor or worker abets the commission of an offence punishable under sub-section (1) of section 135, sub section (1) of section 136, section 137, or section 138, on his conviction for such abetment, may also be cancelled by the licensing authority. Such cancellation shall be made after giving such person an opportunity of being heard.

  2. In section 151, which deals with the process of court taking cognizance of an offence, certain doubts and ambiguities had been raised whether the police will entertain the cases of theft. Four additional provisions have been made now to adequately empower the police and to clarify the cognizable offence.

  1. The Court may also take cognizance of an offence punishable under, this Act upon a report of a police officer filed under section 173 of the Code of Criminal Procedure, 1973:,

  2. A special court constituted under section 153 shall be competent to take cognizance of an offence without the accused being committed to it for trial,

  3. For the purposes of investigation of an offence punishable of this Act, the police officer shall have all the powers as provided in Chapter XII of the Code of Criminal Procedure, 1973.

  4. Not withstanding anything contained in the Code of Criminal Procedure 1971, an offence under section 135 to 140 or section 150 shall be cognizable and non-bailable.

These amendments convey a single message that Indian Government and Parliament are very serious about the whole issue. The structure of these amendments reinforces this approach that theft of electricity shall be dealt with ruthlessly. These offences have been made cognizable and non-bailable. What is required is proper implementation of these provisions. Electricity theft must be projected as a social evil and those who indulge in this must get a black social stigma. Arrests, putting in jail and convictions must be publicized so that others fear. A few salutary punishments will ensure delivery of results. Each State must have an action plan on this. Perhaps Ministry of Power, through a proper M.I.S. could monitor action and link these actions with the benefits under APDRP. As mentioned, West Bengal and Andhra Pradesh have been able to derive good benefits out of the actions that they took; others can also do. The ACT as amended empowers various agencies and authorities. What is now required is the ACTION.