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One estimate says 17 lakh out of 26 lakh electricity meters in Delhi households are tampered with.

Angry residents of several colonies of th national capital, exasperated by long hours of power cuts, have resorted to mindless violence to force the authorities to redress their grievances. These incidents increased on the day the private sector companies, Tata Power and BSES, took over power distribution in Delhi from the government-owned Delhi Vidyut Board. "We cannot improve this distribution overnight", confessed top engineers of the two companies. "Give us a year to set things right, they said. Each of these companies is to invest Rs. 500 crore over a ten-year period to modernise the distribution. A quick examination of Delhi’s power supply revealed enormous wastage, poor equipment and negligence in replacement of old and worn-out equipment for the last ten years!

If this could happen in the nation’s capital, what can be expected in other parts of the country? At a discussion that the Rajiv Gandhi Institute for Contemporary Studies organised in Delhi recently, with former Finance Minister Dr. Manmohan Singh presiding, experts stated that the power sector needed structural reform, equipment change, mindset change and an approach based on efficiency, cost reduction, competitiveness and quality, if it is ever to serve the economy’s needs. "In the infrastructure as a whole, accountability is not there," said Dr. S. L. Rao of the National Council of Applied Economic Research.

In Delhi alone, 51 per cent of the power generated is written off because of transmission and distribution losses! So, to make up for this, the people who use the other 49 per cent are made to pay the cost of the 51 per cent also—-while the power tariff keeps rising every year and the power cuts become longer. One estimate says 17 lakh out of 26 lakh electricity meters in Delhi households are tampered with. Some of the super-rich in posh colonies are the worst culprits. This tampering, with the collaboration of DVB employees, hurts the DVB to the extent of Rs. 1,200 crore a year. Another estimate is that the employees earn Rs. 320 crore out of the alleged transmission and distribution (T & D) losses annually.

How can these employees be persuaded to give up this highly profitable ‘under the table’ operation? A similar situation exists in other State electricity boards (SEBs) also. The boards seem to exist only for the employees. The whole power sector in the country is in a mess with a Rs. 22,000 crore loss annually, enough to provide better primary schools throughout the country. Though it is not always brought out when the power sector is discussed, it is well known that those who benefit—employees, contractors, a section of the public—all form a huge vested interest front that blocks all reforms.

In addition, whatever reforms were started have been lopsided. After some eight years of reforms we now realise that we started from the wrong end—the reforms should have begun with distribution so that the power sector could have been seen to be moving towards sustained profits to induce investors to put money in power generation and transmission.

The mess cannot be allowed to continue. Dr. Manmohan Singh, chairing the discussion, said: "In the power sector, things have gone from bad to worse." But the ‘still worse’ part is yet to come. Rao says that among the findings on the state of the SEBs is that much of the equipment is missing critical parts, like fuse panels without fuses. There is no proper database and billing is faulty. All this results in penalisation of the honest bill payer. "Cross-subsidies have imposed such a burden on paying customers like honest industries and the railways that they are moving away from SEBs." Last year, as on April 1, SEBs owed Rs. 41,473 crore to Central power utilities like the NTPC. According to Naseer Munjee, MD, Infrastructure Development Finance Corporation, India is losing 10 billion dollars in power theft—an astronomical loss for a poor country which is crying for funds for everything from primary schools to primary health centres to primary roads. "The power sector needs a drastic reforms agenda," says Munjee.

T. L. Sankar, Administrative Staff College, Hyderabad, has suggested a three-step reforms agenda in which farmers are supplied the cheapest power, that is from hydro-generation, households and small consumers are charged a higher level than the farmers and the low tension and high tension industries get the higher-cost bulk supplies from large power houses. He says that smaller 25 mw generators could generate low cost power for households and small industries. He has developed an entire model of a people’s power system which is based on availability, accessibility and affordability for low economic status consumers. The advantage of the model is that there would be greater acceptability and sustainability for such a reform as affordability is married to costs.

The Delhi experiment in which distribution has been corporatised and then the corporations sold to private companies would be watched with interest. The new owners have undertaken to reduce the T & D losses, and the regulatory authority will link their returns to proven reduction in these losses and increase in efficiency of distribution. This is distinct from the invitation to the private sector to own and operate power generation projects with the government assuring a certain return. What happened to the Dabhol Power Company is the best example of the failure of such a model in which the power generators had no commitment or incentive to reduce costs.

The Government is coming out with an Electricity Bill that will drastically change the power sector if it is implemented in full. The reforms plan is to demonopolise power generation and distribution, allow competition in both, remove sectoral restrictions in supplies and let power generators find their own markets. Even smaller distribution agents or companies could be formed who would undertake efficient distribution and win customers on this basis .There would be a few transmission companies that would lay out the network, and distribution and quality would be monitored by regulatory bodies at the State level. The Government’s role will be largely at the policy level.