NATIONAL MANAGEMENT COLLEGE

SENIOR MANAGEMENT WING

(7TH SENIOR MANAGEMENT COURSE)

INDIVIDUAL RESEARCH PAPER

ON
MENACE OF POWER THEFT-CAUSES AND SOLUTIONS

BY

Zahid Hussain Bhayo

(Customs & Excise Group)

A paper submitted to faculty of the National Management College, Lahore, in

partial fulfillment of the requirements of 7th Senior Management Course.

The Contents of this paper are the end product of my own research, reflect my
own personal views and are not necessarily endorsed by the College.

Signature:--------------------------------
Date:--------------------------------------

Directing Staff: Mr. Waqar Ali Khan

 TABLE OF CONTENTS

Preface i
Executive Summary ii
List of Acronyms iii
Introduction

Introductory Note 1
Statement of the problem 3
Significance and scope of study 3
Review of available Literature 3
Methodology 4
Organization of paper 4

Chapter-1 Extent of Line Losses in WAPDA System

1.1 Transmission and distribution losses (Million KWH) during 2008-09 & 2007-08 6
1.2 Units used in Auxiliaries 8
1.3 Units lost in transmission, transformation and grid station 9
1.4 Units lost in distribution 9
1.5 How the loss of units in WAPDA System is made good? 11
1.6 Extent of losses in different Regions of Asia 13

Chapter-2 Power Theft – Background of the Issue

2.1 Power theft –city specific or other-wise 16

2.2 Methods adopted for power theft 20
2.3 Power theft causes- problems in enforcement-Challenges/Issues 22
2.4 Effective enforcement of law in restricting and controlling power theft 24

Chapter-3Creation of Distribution Companies

3.1 Main functions of Distribution Companies 26

3.2 Problems of Distribution Companies 27
3.3 Successes and failures of Distribution Companies 29

Chpater-4 Conclusions and Recommendations

4.1 Conclusions/Lessons Learnt 30

4.2 Solutions 31

Recommendations - The way forward.

Bibliography 38
 PREFACE
This Individual Research Paper deals with a subject which has wide scope and prime
significance for national economy. Acute shortage of electricity viz-a-viz its demand is creating
huge problems for the entire society. All electricity consumers including industrial and domestic
users are facing immense difficulties. A considerable portion of electricity deficit is result of
chronic electricity theft.

Pakistan is trying to tackle this issue with drastic measures like two weekly holidays and
the reduced working hours for the commerce and industry. In this Study it has been endeavoured
to identify and examine the fundamental deficiencies and failures of the power sector and to
suggest an inter-related strategy with a set of recommendations to combat the menace of power
theft.

I am overwhelmingly grateful to the Faculty Advisor Mr. Waqar Ali Khan for his
consistent encouragement and highly thoughtful guidance. I am also indebted to the college
Administration for providing the best kind of logistical and staff support and above all the most
conducive intellectual and research atmosphere.

i
 EXECUTIVE SUMMARY

Keeping in view the current power crisis and its consequences on the national economy,
a need was felt to carry out research on power theft menace. To remedy this situation, it is
strongly felt that, our focus on conservation of energy needs to be stronger than being on the
addition of new generation capacity, as a megawatt saved is much better than a megawatt added.
The biggest hindrance in the way of energy conservation is the theft of electricity because power
thieves have no incentive to save electricity which they are enjoying free of cost.

For the purpose of this research paper, an effort has been made to first identify the extent
of the problem, its analysis and remedial measures than can be adopted to move forward on the
issue.

The power generation transmission and distribution in Pakistan is controlled and

managed by PEPCO. The generation business is being carried out by three generation
companies known as GENCO-1, GENCO-2 and GENCO-3. The transmission part is handled by
National Transmission and Distribution Company (NTDC), while the distribution of electricity
is handled by Distribution Companies collectively known as DISCOs and having individual
names like Lahore Electric Supply Company LESCO etc.

Technical losses on account of GENCOs caused by consumption of power in the

auxiliaries and other related equipment are around 2% of total generated power. Losses by
NTDC are due to long transmission lines, which while painful, are at least dependent on known
factors with known solutions. In the case of NTDC the losses can be reduced by simply moving
to higher transmission voltages and at the end it is just a matter of greater investment. However,
the real and painful problem is with the distribution companies, where a significant portion of
line losses is not due to technical losses but due to theft of energy, which is also called
administrative losses. These losses are significantly higher than other countries of the region like
Sri Lanka and Bangla Desh, the only exception being India.

While analyzing the issue of theft of energy in Pakistan, it was observed that there are a
number of factors affecting its quantum. Prominent amongst these factors are the location of the
area and the type of load being fed through the system. As an example, if the load is industrial,
the theft is expected to be lower than in the case of domestic consumers. Similarly if the area is
spread out, then the consumers are hard to reach making it difficult to exercise proper

ii
administrative control and the quantum of loss will be more. The methodology adopted for
presentation of results as percentage of units received can also be quite misleading as larger
number of units received makes the losses appear to look lower artificially.

Common methods adopted for stealing electricity vary from open stealing through use of
kundas to the sophisticated like use of remote controls. What method is adopted by the
consumer depends to a large extent on the area involved and the law and order situation there.
Several other factors also affect the quantum of theft of energy. These factors are both social and
economic in nature. The situation is further exacerbated by a weak writ of the government, a
lack of accountability, ineffective enforcement of law and administrative difficulties in
monitoring consumers over spread out areas.

Distribution companies were carved out of WAPDA under the umbrella of PEPCO,
ostensibly to decentralize the utility company, make it efficient and finally privatize the whole
electricity business except hydro generation. There is no significant progress in this direction
and none is expected in the near future.

The companies have failed to achieve any substantive improvement in their working and
the service provided to the consumers remains quite unsatisfactory. In order to improve the
situation, it is necessary that a coordinated effort is mounted both by the law enforcement
agencies and the employees of the utility companies. Surveillance is enhanced and extensive
checking is carried out in a planned manner by fixing proper priority.

There is an urgent need to adopt latest and modern technologies. Installation of smart
electricity meters will go a long way in eliminating the power theft.

Finally, a robust campaign to motivate the people to desist from stealing electricity, to
ensure cooperative effort of the staff through labor union and an effective role of the provincial
governments is necessary. This coordinated effort may be the only way to make the distribution
companies solvent in the long run by eliminating the menace of power theft.

iii
 LIST OF ACRONYMS

1. PEPCO: Pakistan Electric Power Company.

2. NTDC: National Transmission and Distribution Company.
3. DISCO: Distribution Company.
4. LESCO: Lahore Electric Supply Company.
5. HESCO: Hyderabad Electric Supply Company.
6. MEPCO: Multan Electric Supply Company.
7. GEPCO: Gujranwala Electric Supply Company.
8. IESCO: Islamabad Electric Supply Company.
9. PESCO: Peshawar Electric Supply Company.
10. TESCO: Tribal Electric Supply Company.
11. QESCO: Quetta Electric Supply Company.
12. NEPRA: National electric Power Regulatory Authority.
13. GoP: Government of Pakistan.

iv
 INTRODUCTION

Introductory Note

Prior to 1958 electricity generation, its transmission and distribution was a provincial
subject. Each province had its own electricity department where the administrative control was
exercised by Secretary Water and Power of that province. In due course of time, it was realized
by the Federal Government that for national development in the field of industry and
improvement in the standard of living of the masses it was necessary to make coordinated
efforts. Consequently, through an act of Parliament, a new development authority was
constituted and named WAPDA, the Water And Power Development Authority. The main
objective of this Authority was to develop the Water and Power resources of the country in a
nationally cohesive and coordinated manner.

WAPDA during its initial years was a success story when great contribution was made to
the socio economic development of the country while the entity itself operated profitably. Mega
projects of national importance like Tarbela and Mangla Dams were conceived and completed,
huge network of transmission lines, sub stations and distribution network was established,
maintained and improved upon.

This rapid expansion, especially the development of Hydro-power had its limitations due
to geographical constraints. Major sources of power generation i.e. Mangla and Tarbela were at
a great distance from the load centers like Lahore and Karachi. This resulted in occurrence of
high technical losses during transmission. Some efforts were made to set right this situation by
the planners. As such, a number of thermal units were constructed in a spread out manner
throughout the country by placing them near to the load centers. Thermal units were brought on
line at Karachi, Guddu, Muzaffar Garh and Multan keeping in view the objective of reduction of
transmission line losses. Introduction of extra high voltage (EHV) line was also a step in this
direction.

It was also realized by the engineers and planners that total reliance on one form of
power generation was not advisable. It was necessary to keep a proper power mix in order to
ensure that a problem in the availability in one source of power, say, water may not result in the
total collapse of the system. Thus a proper power mix was maintained. However, this mix has

1
changed in favor of thermal generation during the last few decades as is evident from the
following data.

RATIO OF HYDEL-THERMAL MIX PROJECTS IN PAKISTAN

Sr. No. Year Hydel: Thermal Mix Remarks

1 1960 44:56
2 1970 50:50
Ideal for Economic
3 1980 58:42 Development of the
Country
4 1985 67:33
5 1990 45:55
6 2000 33:67
7 2005 37:63
8 2008 33:67

Total installed electricity capacity is 19,000 MW which includes 6,250 MW generated

by independent power producers. The change in generation mix failed to produce desired result
of substantial decrease in the Transmission and Distribution losses.
It has been observed that PEPCO has not tried to tackle the power theft menace headon.
The menace of power theft is also eating away substantial national resources. This home grown
menace needs to be tackled in holistic manner. One of the major factors for this lack of emphasis
is the paucity of funds.
The Power Sector in Pakistan has been recently re-organized with the hope and mandate
to cut the system losses drastically and to overcome power theft menace. Present structure is
elaborated in the following diagram.

2
 Statement of the Problem

Presently the country is facing electricity shortage of over 2500 to 5000 Mega Watt. The
shortage is attributed to the following two main reasons:-

i. A phenomenal rise is in domestic demand.

ii. Power theft and transmission and distribution losses.

2. In the upcoming Study we shall try to answer the following questions and to find out the
solutions:-

i. What is the extent of line losses in WAPDA System and how the loss is made
good?
ii. Whether the power theft menace is city specific? If so what are the reasons
thereof?
iii. What are the main functions of Distribution Companies like LESCO, GEPCO
etc.? What are their success and failures?

Significance & Scope of Study

The vastness of energy crisis is having far-reaching implications for the national
economy. The impact of this crisis is producing adverse impact for the entire society throughout
the length and breadth of the country. Industrial consumers, trade, Govt. offices, domestic
consumers and all other segments of society are bearing the brunt of energy crisis.
The significance of the study becomes paramount when seen in the backdrop of huge
theft of electricity by all types of consumers spread all over the country.
As will unfold in the coming pages it has been established that electricity theft in South
Asian Region, in which Pakistan is concluded, is highest in the world. One analysis indicates
that 15% electricity is stolen through meter tampering and other illegal means. In rupee terms
the loss comes to a staggering Rs. 150 billion a year.

Review of available literature

Despite reasonable efforts I could not find an exclusive treatise on the subject of power
theft. To ascertain the true position different reports of WAPDA, PEPCO, Annual report of State
Bank of Pakistan for the year 2008-2009, different websites and the news papers were browsed.
Consequently this study is based on the material which has been published by the competent
Govt. authorities and other modern sources of information which have been clearly mentioned in
footnotes on the relevant pages as well as in the Bibliography.

3
 Methodology

In order to examine the nature and volume of power theft, the causes leadings to power
theft were looked into in detail. Keeping in the view data of power unit losses in WAPDA’s
system based on WAPDA, PEPCO and other authorities like State Bank of Pakistan’s reports
the conclusions were drawn. Keeping in view above data and the objective conditions prevailing
in our country recommendations have been made to solve the power theft menace. In addition to
review of the above-mentioned data, the interviews and discussions were held with different
stake holders.
The method applied in this study is a combination of analytical, descriptive and
quantitative methods. The hard data retrieved from authentic sources has been analyzed on the
touchstone of objective conditions as well as common practices in South Asia.

Organization of Paper

The preliminary part of the paper consists of preface and the executive summary, list of
acronyms and introduction, Introduction consists of introductory note, statement of the problem,
significance and scope of study, review of available literature and the methodology.
Chapter-1: Shows the extent of line losses in WAPDA system.
Chapter-2: Deals with Power theft and the issues incidental to power theft.
Chapter-3: Dilates upon the functions and responsibilities of Distribution Companies.
Chapter-4: Contains the Conclusions drawn and the solutions / recommendations to eliminate
the power theft.

4
 CHAPTER-1

EXTENT OF LINE LOSSES

IN
WAPDA SYSTEM

5
1.1 Transmission and Distribution Losses (Million KWH) During 2008-09 & 2007-08.

Units generated through all sources are sold to Distribution Companies and their billing
is carried out at 132 KV level. A detailed picture is given in table-1 of the units generated and
used in auxiliaries, lost in transmission, transformation losses, distribution lines losses. Theft of
electricity is hidden under the cover of distribution line losses.

A glance on this data shows that major loss of units occurs in the distribution. The losses
in the auxiliaries, transmission and transformation appear to be relatively low. No doubt there is
still room for improvement in the losses experienced during transmission and transformation, the
major room for improvement exists in the losses experienced in the distribution network. The
need for improvement in distribution becomes especially significant due to the fact that the
distribution losses contain a significant portion lost because of the theft of electricity.

After restructuring of WAPDA a new entity named PEPCO has been created to oversee
the generation, transmission and distribution of electricity. The responsibilities of PEPCO are
further subdivided between independent companies, each responsible for its own area of
activity. Accordingly NTDC is responsible for transmission and transformation losses up-to
220KV. For voltages lower than that, individual distribution companies are responsible.

However for the purpose of our discussion, the main objective is to identify the theft of
electricity, its causes and remedies. For this purpose, it will be better that we concentrate on the
losses incurred on the distribution lines operating at 11KV and below. This is the area where
significant theft is taking place and we need to make improvements. No doubt some of the
consumers are billed at 132KV, but they are small in number and there seems to be a consensus
among the PEPCO authorities that no theft is taking place at these consumer premises. As they
are small in number, they are easy to check and proper vigilance is maintained by the utility
staff.

As the area of responsibility for each DISCO starts from 132 KV lines, we need to look
at the line losses data that includes the 132 KV system of the companies. Therefore, in order to
have better analysis, the units sent to various distribution companies have been re-tabulated by
incorporating the 132 KV units under the heading of Transmission losses. These figures give us
a good idea about the volume of power loss that is the direct responsibility of the distribution
companies. Higher the figure of loss, more is the room for improvement, at least theoretically.

6
The problem may be more clearly understood by examining data of the transmission and
Distribution losses of 132 KV and below system attributed to each company and as is illustrated
in the following tables.

TRANSMISSION & DISTRIBUTION LOSSES

(132KV & Below System)
(Million kWh)
Description 2008-09 2007-08

Gross Generation 84360 86141

Units used in Auxiliaries 1672 1642

1. Net Generation 82688 84499

2. Units supplied for Distribution (132 KV) 79743 81636
3. Units lost in transmission, transformation & Grid station 2945 2863
(1-2)
(500KV & 200KV system)
4. Transmission, transformation & Grid Station losses as %age 3.5% 3.4%
of Net Generation (3/1)x100
5. Units billed 65287 66540
6. Units lost in distribution (2-5) 14456 15096
7. Units lost in distribution as %age of net Generation 17.5% 17.9%
(6/1)x100
8. Transmission & distribution losses (4+7) 21.0% 21.3%

Source: PEPCO Progress Report (2008-09) Statistics Directorate, WAPDA House Lahore

Distribution Losses W.R.T. Units Sent Out to Each Company

(132.KV & Below System)
2008-09 %age Losses
Units (M.kwh) 2008-09 2007-08 Inc./Dec.
Companies Received Billed Lost
LESCO 15116.99 13167.62 1949.37 12.9 12.8 0.1
GEPCO 6672.07 5956.52 715.55 10.7 11.1 -0.4
FESCO 9047.08 8089.18 957.90 10.6 11.2 -0.6
IESCO 8047.42 7200.81 846.61 10.5 10.3 0.2
MEPCO 11146.69 9050.50 2096.19 18.8 18.5 0.3
PESCO+TESCO 116484.82 7559.82 4125.00 35.3 34.5 0.8

HESCO 7858.53 5128.24 2730.29 34.7 35.9 -1.2

QESCO 5144.88 4109.51 1035.37 20.1 20.8 -0.7
TOTAL DISCOs 74718.48 60262.20 14456.28 19.3 19.5 -0.2
KESC. Exp 5014.39 5014.39 0.00 0.0 0.0 0.0
IPPs 9.93 9.93 0.00 0.0 0.0 0.0
G. TOTAL 79742.80 65286.52 14456.28 18.1 18.5 -0.4
Source: PEPCO Progress Report (2008-09) Statistics Directorate, WAPDA House Lahore
1.2 Units Used In Auxiliaries.
7
 The Auxiliary power consumption by the thermal stations during 2001-02 is 8.72%
against 9.01% in 2000-01. This comprises the power consumption by all the unit auxiliaries for
generation of electricity as well as the common station requirement such as station lighting, air
conditioning etc. The region wise auxiliary power consumption as percentage of gross
generation from 1997-1998 onwards is shown below:

Every power plant that produces electrical energy ends up using a portion of this energy
for certain essential functions of the plant like lighting, air conditioning etc at the power station.
It is simply written off as the necessary loss to be incurred for the production of power. Which
are generally 2% of generated units could be lowered up to 1% by installing efficient auxiliary
equipment
Nothing could be farther from the truth. When we look at the overall production of
electricity and its consumption in auxiliaries, it is seen that a significant portion of the generated
energy is never available for consumption by the consumer as it goes to the auxiliaries. Some of
the factors affecting the auxiliary consumption are:
• Unit Generation and Load Pattern
• Operation of Plant Auxiliaries
• Service auxiliary such as Illumination
• Air Conditioning etc
• Unit startups / shutdowns

The data regarding consumption of units in generation has been collected and is as under.

USE OF GENERATED POWER IN AUXILIARIES BY PEPCO

(Million KWH)
Description 2008-09 2007-08
Gross Generation 84360 86141
Units Used in Auxiliaries 1672 1642
As %age of generation 1.98% 1.90%

The consumption of Power in plant auxiliaries can be managed and reduced by making
an intelligent effort. A search on the net on this subject has revealed that M/s Tata Power
Company carried out a study to implement energy conservation techniques and managed to
reduce the cost of each unit generated by a significant amount of 0.25 paisa per KWH. The
auxiliary power consumption of Tata Power Company is among the lowest in India.

8
1.3 Units Lost In Transmission, Transformation And Grid Stations.

The units lost in transmission, transformation and distribution have been expressed as a
percentage of units generated. As a percentage, these figures look small, 6.5%, but in terms of
units lost, 5357 million units (KWH) were lost in the transmission and transformation phase
during the year 2008-09. The consumer end rate of each unit at present is Rs. 8 per unit. At this
rate this figure represents a loss of Rs. 42.8 billion per annum. Thus if an improvement of 1% is
achieved, this will translate into an annual saving of 0.428 billion.

However, possible improvement in the losses of transmission and grid stations is limited
by technical reasons. The biggest problem in this regard was felt to be the great distances on
which power has to be transmitted. The constraint on available resources is also another
problem. WAPDA has done a good job in the installation of national grid, which is one of the
largest integrated grid systems of the world, and running it with a reasonable level of stability.

Despite all these difficulties significant improvement is quite possible. The two main
factors that can bring about improvements are the use of more efficient power transformers now
available in the world and by extending the use of higher voltage lines to replace the existing
lower voltage lines. This would mean construction of more lines on 500KV and replacement of
existing 132 KV lines with 220 KV lines and grid stations. Probably the only constraint in this
regard is the availability of resources.

1.4 Units Lost In Distribution.

Distribution losses are the most damaging and painful part of the story. They have
distinctly two components, the first being losses on account of technical constraints which are
similar to transmission and transformation losses at high voltage. Second component is the theft
of electricity and it is this component, which needs more attention of the management. As this
improvement can be brought about through administrative measures through the staff which
already exists, huge additional expenditure will not be involved to bring this improvement.

In order to reach a more realistic picture it will be better to analyze the data regarding
line losses on 11 KV and below system because it is presumed that there is no theft of electricity
experienced on the 132 KV System. Therefore line losses according to company for 11 KV and
below system are as follows:-
9
 TRANSMISSION & DISTRIBUTION LOSSES
(11KV & Below System)
(Million kWh)
Description 2008-09 2007-08
Gross Generation 84360 86141
Units used in Auxiliaries 1672 1642

1. Net Generation 82688 84499

2. Units supplied for Distribution (132 KV) 77331 79095
3. Units lost in transmission, transformation & Grid station (1-2) 5357 5404
(500KV & 200KV system)

4. Transmission, transformation & Grid Station losses as %age 6.5% 6.4%

of Net Generation (3/1)x100

5. Units billed 65287 66540

6. Units lost in distribution (2-5) 12044 12555
7. Units lost in distribution as %age of net Generation (6/1)x100 14.5% 14.9%

8. Transmission & distribution losses (4+7) 21.0% 21.3%

Source: PEPCO Progress Report (2008-09) Statistics Directorate, WAPDA House Lahore

Distribution Losses W.R.T. Units Sent Out to Each Company

(11.KV & Below System)
2008-09 %age Losses
Units (M.kwh) 2008-09 2007-08 Inc./Dec.
Companies Received Billed Lost
LESCO 15100.03 13167.62 1932.41 12.8 12.5 0.3

GEPCO 6574.99 5956.52 618.47 9.4 9.4 0.0

FESCO 8899.48 8089.18 810.30 9.1 9.3 -0.2
IESCO 7800.93 7200.81 600.12 7.7 7.6 0.1
MEPCO 10661.82 9050.50 1611.32 15.1 15.1 0.0
PESCO 8834.34 5899.59 2934.75 33.2 32.2 1.0

TESCO 2153.84 1660.23 493.61 22.9 26.8 -3.9

HESCO 7485.46 5128.24 2357.22 31.5 32.2 -0.7

QESCO 4795.93 4109.51 686.42 14.3 14.2 0.1
TOTAL DISCOs 72306.82 60262.20 12044.62 16.7 16.7 0.0
KESC. Exp 5014.39 5014.39 0.00 0.0 0.0 0.0

IPPs 9.93 9.93 0.00 0.0 0.0 0.0

G. TOTAL 77331.14 65286.52 12044.62 15.6 15.9 -0.3
Source: PEPCO Progress Report (2008-09) Statistics Directorate, WAPDA House Lahore

10
 A glance at the data reveals that out of the nine distribution companies for which the data
is available five are the high loss distribution companies. There appears to be a co-relation
between the high loss of a distribution company and the following factors:-

a. Whether the service territory of the distribution company is spread out or it is

geographically compact.
b. Law and order situation in the area in question.
c. Economic conditions of the people.
d. Level of education of the population.
e. Presence of the industries.

1.5 How The Loss Of Units In WAPDA System Is Made Good.

The primary effort of each and every distribution officer / official is directed towards this
goal of recouping the units lost on the WAPDA System. Huge expenses are borne by
department from its own resources as well as funds received from the Government for
improvement of technical parameters of the existing system and its extension. Each DISCO has
its own planning department which processes and approves LT Proposals, up to 400 volts, and
HT Proposals, up to 11KV, generated by field formations of that particular company. Each
proposal received from field formation is properly scrutinized and its benefits cost ratio is
calculated. Funds are then allocated in a manner which maximizes the benefits attainable by a
company against minimum expenses.

Area planning is carried out by involving several 11 KV Feeders falling in a certain area
and by shifting sources of supply to a particular locality technical losses occurring on the 11
KV System are reduced.

More and more 132 KV grid stations are being constructed. This helps in the reduction
of length of 11 KV Feeders required for feeding the existing as well as upcoming loads. Due to
transmission of power and higher voltage i.e. 132 KV instead of 11 KV technical losses are
reduced significantly.

A large number of capacitors are being installed at grid stations as well as the 11 KV
Feeders. Due to introduction of capacitors power factor of the system is being improved with a

11
 consequent improvement in voltage, release of generation capacity as improvement in technical
loss.
Introduction of better designed meters is another measure being adopted by the
Distribution companies. Ideally speaking, a meter has to be designed which is tamper proof and
accurate. Achievement of these two goals in absolute terms is not possible. However,
improvements in design are being incorporated all the time with a view to bring improvements
in the working of companies though slowly.

More accurate and difficult to tamper meters are being introduced by distribution
companies. These meters help in reduction of line losses by recording the units consumed more
accurately on the one hand and controlling theft of energy on the other hand. However, it is
observed that the present consumer base of the company is huge and replacement of the
existing meters is a huge task. It is unrealistic to expect that any company will be in a position
to replace its existing very old electromechanical meters with more accurate state of the art
solid-state meters in the near future. However, an effort in this regard is underway and every
company has embarked upon a program for the gradual replacement of existing meters with
more modern meters.

Administrative Measures

i. Securing of industrial meters.

ii. Monitoring of commercial plazas.
iii. Surveillance by Special Teams.
iv. Creation of Special Directorate for processing of information received through
public regarding theft of electricity.
v. Spot check of meter readings in an area through line staff.

The1 major source of making the losses ( in the shape of distribution losses and power
theft) good is through subsidies given by the Federal Government. For instance during financial
year 2008-09 subsidies provided to Energy Sector (WAPDA and KESC) reached Rs.140
Billion constituting 1.3% of GDP.

1
State Bank of Pakistan; Annual Report 2008-09
12
1.6 Extent of Losses in Different Regions Of Asia.
In order to understand the extent of losses in Pakistan viz a viz other comparable
countries in the region it will be helpful to discuss in some detail the status of energy sector in
India. The problems faced by India are quite similar to us, whereas the performance of the sector
is worse than ours in Pakistan. The overall losses are quoted from 38% to 40% depending upon
the source.

The following extract from Wikipedia describes the power sector in India well and is
generally in agreement with other studies carried out on the subject.

“However, due to lack of adequate investment on transmission and distribution (T&D)

works, the T&D losses have been consistently on higher side, and reached to the level of 32.86%
in the year 2000-01.The reduction of these losses was essential to bring economic viability to the
State Utilities.

As the T&D loss was not able to capture all the losses in the net work, concept of
Aggregate Technical and Commercial (AT&C) loss was introduced. AT&C loss captures
technical as well as commercial losses in the network and is a true indicator of total losses in the
system.

High technical losses in the system are primarily due to inadequate investments over the
years for system improvement works, which has resulted in unplanned extensions of the
distribution lines, overloading of the system elements like transformers and conductors, and lack
of adequate reactive power support.

The commercial losses are mainly due to low metering efficiency, theft & pilferages.
This may be eliminated by improving metering efficiency, proper energy accounting & auditing
and improved billing & collection efficiency. Fixing of accountability of the personnel / feeder
managers may help considerably in reduction of AT&C loss.

With the initiative of the Government of India and of the States, the Accelerated Power
Development & Reform Programme (APDRP) was launched in 2001, for the strengthening of
Sub – Transmission and Distribution network and reduction in AT&C losses.

The main objective of the program was to bring Aggregate Technical & Commercial
(AT&C) losses below 15% in five years in urban and in high-density areas. The program, along

13
with other initiatives of the Government of India and of the States, has led to reduction in the
overall AT&C loss from 38.86% in 2001-02 to 34.54% in 2005-06.”

As already stated, statistics vary widely depending upon the source. However, they are
invariably indicative of a trend and useful in assessing the room for improvement in each case.
A look at countries of the South-East Asia reveals that among all of them Pakistan and India are
the worst performers. Vide his article in DAWN,2 Mr. Sunil Sharan who has worked in clean
energy for a decade and also worked as a Director of the Smart Grid Initiative at General
Electric from 2008 to 2009, is of the view that “approaching 50 percent, power theft in the
region (South Asia) is amongst the highest in the world”. As per statistics available on the web
site of NationMaster.com, in 2004, the line losses incurred by India were 26.29% which were
the 13th highest in the World. By comparison Pakistan had 24.58% losses and was number 14 in
the World. Sri Lanka had 16.73% losses and Bangladesh had an unbelievable 9.49% losses.
Their respective ranking in the world was 33 and 83. However our great neighbor China was a
different story entirely. The line losses in China stood at an astonishing figure of 6.32%.

These figures indicate beyond any doubt that there is tremendous room for improvement
in line losses in Pakistan. Energy is the most significant factor that will affect the stability and
ultimately prosperity of the country in the foreseeable future. This stability and prosperity will
be impossible to achieve without bringing an improvement in the line losses of the utility
companies.

2
Sharan Sunil, “ Climate concert in South Asia”Daily Dawn Lahore, May 15, 2010
14
 CHAPTER-2

POWER THEFT –
BACKGROUND OF THE ISSUE.

15
2.1 Power Theft – City Specific or Other-Wise.

In order to look at the problem of theft of electricity from this perspective data regarding
line losses was collected from PEPCO. It was learnt that PEPCO is sub-divided into Distribution
Companies known as DISCOs. These distribution companies are nine in number and cover the
length and breadth of the country excluding area controlled by KESC and Azad Jammu and
Kashmir. Each distribution company is further sub-divided into circle, divisions and finally sub-
divisions. The company, therefore, maintains data regarding units received, sold and lost not on
the basis of cities or other residential localities but on the basis of sub divisions and divisions as
perceived by PEPCO.

The data given in PEPCO’s Progress Report for 2008-09 issued by the Statistics
Directorate PEPCO, Lahore reveals that the area in jurisdiction of each division is based on
geographical proximity. In some of the divisions the area could have population living in cities
as well as rural areas. However, there could be some divisions which are purely dealing the city
areas. In case of large cities several divisions and circles may feed one city. It was thus found
appropriate that instead of getting into too much detail it will be appropriate for the purposes of
present study to proceed according to division of the area on geographical ground carried out by
each distribution company falling within PEPCO. The division-wise data of the units received,
sold and lost in comparison with the last year’s result is placed below:-
DIVISION-WISE LOSSES
Company LESCO

Divisions/Circles 2008-09 2007-08 INC/DEC.

Units (M. KWH) %age Units (M. KWH) %age %age
RCVD BILLED LOST Losses RCVD BILLED LOST Losses
Gulshane-e-RAvi 391.37 326.33 65.04 16.6 405.67 335.61 70.06 17.3 -0.7
Feroze Wala 915.86 823.64 92.22 10.1 947.31 856.92 90.39 9.5 0.6
Ravi Road 436.81 385.21 51.60 11.8 457.73 401.93 55.80 12.2 -0.4
Data Darbar 338.07 293.76 44.31 13.1 354.11 305.96 48.15 13.6 -0.5
Badami Bagh 401.22 365.40 35.82 8.9 421.09 387.34 33.75 8.0 0.9

The study showed that the power theft is not a city specific phenomenon but is found all over the
country though there are variations in the extent of theft. PEPCO Authorities have caught
470836 power thieves from nineteen major cities of the country; have recovered 2620.01 million
from them. 6826 FIRs have been registered on this account3 during the period July 2009 to
February 2010.
3
PEPCO advertisement in Daily Dawn Lahore, Dated: 24th April, 2010
16
From the analysis of above data the following facts are revealed:-

i. The trend in losses depends more on the area involved rather than whether the
locality is categorized as rural or urban.
ii. Some times, major difference in the losses is encountered in the same general
area. This difference is attributable to the consumer base of the various divisions.
Looking at LESCO, for example, the accumulated losses of Gulshan-e-Ravi Division for
the year 2007-08 are 17.3% and 16.6.% for the year 2008-09. At the same time the losses
of Ferozewala Division, in the same area, are 9.5% and 10.1% respectively. Both
divisions lie in the same northern circle. The significant reason for showing improved
line losses in the Ferozewala Division compared with Gulshan-e-Ravi is that Ferozewala
Division has a predominant industrial load which is not the case for Gulshan-e-Ravi. In
fact, if we look at the quantum of units lost it is seen that for the year 2008-09 92.22
million units were lost in Ferozewala Division while only 65.04 million units were lost in
Gulshan-e-Ravi Division. At the same time the percentage loss in Ferozewala Division
was calculated at 10.1% only whereas the loss calculated in Gulshan-e-Ravi was16.6.%.
Thus despite a higher quantum of loss of units, Ferozewala Division was showing much
better result than Gulshan-e-Ravi Division.

iii. When comparing data from all over Pakistan it is observed that maximum theft is
taking place in PESCO, with line losses at 33.2%, followed by HESCO with a line loss
figure of 31.5% and TESCO with a line loss figure of 22.9%. Surprisingly, results of
QESCO (14.3%) are apparently much better. Further probing has revealed that the
results of TESCO and QESCO do not reflect the true picture. In case of QESCO a large
number of agricultural tube wells are running on the basis of recovery of fixed amount
irrespective of the units actually consumed. As the consumers are not affected by the
number of units billed, there is massive over billing to the agricultural tube well
connections in this area. This makes the units sold look higher than they actually are and
suppresses the calculated loss figures. In the case of TESCO there is no recovery of bills
from the public as bills for only 4% of the units sold is recovered from the public. As
payment of bill is not an issue for the people of the tribal areas therefore whatever units
are billed to the consumers by TESCO, they are never challenged. Therefore the liability
of the losses indicated by TESCO is doubtful.
The recovery position of the billed units is indicated below:

17
 BILLING, COLLECTION & %AGE OF RECOVERY (2008-09)
(Rs in million)
Companies Billing Collection
Govt Pvt Total Govt Pvt Total
LESCO 6606.90 85410.25 92017.15 6493.19 81769.56 88262.75
GEPCO 2104.47 36061.36 38165.83 1783.26 34393.32 36176.58
FESCO 3046.33 48957.67 52004.00 3084.06 47398.14 50482.20
IESCO 11896.25 35715.44 47611.69 10866.33 35141.15 46007.48
MEPCO 3091.78 51294.89 54386.67 3356.25 48756.85 52113.10
PESCO 4951.92 28994.94 33946.86 4730.76 24963.70 29694.46
TESCO 10628.60 827.67 11456.27 307.98 252.69 560.67
HESCO 13040.87 24099.13 37140.00 6139.17 19184.03 25323.20
QESCO 15988.94 3842.08 19831.02 12249.65 3582.03 15831.68
TOTAL DISCOs 71356.06 315203.43 386559.49 49010.65 295441.47 344452.12
KESC 46278.23 46278.23 13303.49 13303.49
IPPs 191.30 191.30 198.52 198.52
G. TOTAL 117634.29 315394.73 433029.02 62314.14 295639.99 357954.13
2007-08 98897.39 266897.74 365795.13 49088.93 257680.31 306769.24
Source: PEPCO Progress Report (2008-09) Statistics Directorate, WAPDA House Lahore

Companies Collection as %age of Billing Collection as %age of Billing

(2008-09 (2007-08
Govt Pvt Total Govt Pvt Total
LESCO 98 96 96 94 99 98
GEPCO 85 95 95 91 99 98
FESCO 101 97 97 98 99 99
IESCO 91 98 97 97 99 98
MEPCO 109 95 96 90 98 97
PESCO 96 86 87 109 89 92
TESCO 3 31 5 14 28 15
HESCO 47 80 68 58 87 77
QESCO 77 93 80 84 95 86
TOTAL 69 94 89 73 97 92
DISCOs
KESC 29 29 9 9
IPPs 104 104 98 98
G. TOTAL 53 94 83 50 97 84
Source: PEPCO Progress Report (2008-09) Statistics Directorate, WAPDA House Lahore

It is pertinent to mention here that Dr. M. Asif lecturer in renewable energy at Glasgow
Caledomian University UK, is of the opinion that “Electricity theft through kundas, other illegal
connections and meter tampering have been over looked even though it consumes roughly 15%
of the total electricity generated. Losses incurred on this account comes to a staggering Rs. 150
billion a year. In this context repeated tariff hikes are going to promote electricity theft. Dr. M.
Asif has raised the question about the integrity of WAPDA functionaries by saying “will the
WAPDA officials and staffers that promote electricity theft ensure that there is no violation of
the prescribed measures”.4
4
Dr. Asif, M “Toolittle, too late” Daily Dawn Karachi, 28th April, 2010
18
 Vide their Article in Dawn, M/s Dr. Charles K. Ebingeris senior fellow and director of
the Energy Security Initiative at The Brookings Institution in Washington, DC and Kashif
Hasnie is an expert on international security and natural resources management issues, have
stated that “power infrastructure, especially in transmission and distribution, is old and
defective, causing heavy line losses of electricity. There is power theft public and private of
power contributes to 32 percent of these ‘line losses’.5”

Vide his Article in DAWN Mr. Sunil Sharan has said: “Clamp down on power theft by
installing smart electricity meters. Power cuts are crippling the economy and making life
miserable. Approaching 50 percent, power theft in the region is amongst the highest in the
world. Smart meters are digital versions of the spinning electric meters ubiquitous today. Each
cost around Rs. 8000 in terms of Pakistani currency, and virtually eliminates fraud by detecting
when a meter is tampered with or when a wire is illegally hooked to a distribution line. Italy has
already installed some 30 million smart meters. The Italians spent an equivalent of nearly Rs.
25000 crore on them but are also saving Rs. 6000 crores every years, thereby recouping the
investment in only 4 years. All of Europe and much of the US are now following suit with
hundreds of thousands of smart meters. Moneyed classes in the subcontinent consume electricity
worth thousands of rupees, if not more, every month but only a fraction pay what they owe.
Often the meter reader is paid off. His pickings trickle upwards to the powers that be. By
automatically transmitting meters data to a utility smart meters do away with manual labor and
ensure accurate billing. An investment in them could easily pay for itself in less than a year.
Lacking though is the political will to approve them.

Surely for once the ruling elites can swap their greed for society’s benefit. Not only will
utilities the compensated for what they produce, the overall economy too stands to benefit.
Sweden is gaining a third of a percent in annual GDP with smart meters. Imagine the
possibilities in far more inefficient South Asia. The need for new power plants, which are mostly
fired by coal, would also be curbed, avoiding expenditure and lowering emissions.

Just as cell phone companies offer cheap rates at odd hours to free up networks at peak
usage periods, so too can electricity consumption be modulated through time-based tariffs.
South Asian countries typically offer only a single rate for electricity and need to imbibe global
best practices in intelligent rate design.”6

5
Dr. Ebinger Charles K + Kashif Hasnie, “Powerless Pakistan,” Daily Dawn Lahore, 17th May, 2010
6
Sharan Sunil, “climate concert in south Asia” Daily Dawn Lahore, 15th May, 2010
19
 Moreover, lack of co-operation by the police to fight power theft menace and weak legal
wing of the PEPCO are making the efforts to control power theft less effective.

2.2 Methods Adopted For Power Theft.

The methods adopted by the consumers for power theft are varied and generally depend upon
the area we look at. In many areas is witnessed outright direct supply through use of metal hooks
called kundas while on other places highly sophisticated methods like remote control devices are
in use.
i. Kunda Connections
This method involves direct hooking of bare conductors of L.T.Lines through metal
hooks connected to insulated wires. These wires lead directly to the distribution wiring
of the house. This method is mostly adopted in areas where law and order problems are
severe. In the absence of writ of the Government Distribution Company staff is also
powerless to remove these hooks popularly known as Kundas. Mainly, this is prevailing
in some areas of the Karachi and is spread out in rural areas of the rest of the country.
ii. By Passing the Meter
In this method the incoming wire of the meter is connected with the outgoing wire of the
meter just before the meter terminal.
This wire commonly known as a shunt wire makes a large amount of electricity to by
pass the recording mechanism of the meters and therefore goes unbilled.
iii. Tilting of Meter
Some old model meters can be stopped from functioning by simply tilting them up side
down or at an angle. This method is usually used in far flung areas where old meters
are still installed and the visits of staff are rare.
iv. Stopping the Meter Through Hole In Body.
In this method a consumer drills a small hole in the body of the meter and inserts a very
thin wooden stick which stops the rotating mechanism of the meter and the meter is
stopped.

20
 v. Use of X-Ray Film.
In this method the consumer cuts a piece of X-ray film about two centimeters wide, the
consumer then creates a small gap at the top of the meter by inserting a screw driver.
The film strip is inserted into the meter through this opening. The film being flexible
goes along the glass of the meter, ultimately touches the rotating disk and stops its
rotation. The energy is not recorded. This method is also used in case of old meters.
vi. The use of External Earth.
In this method the neutral of single phase meter is disconnected by removing the neutral
wire from the terminal of the meter. The consumer bores a deep hole in the ground
within his premises buries a metal rod in it and takes the neutral from this point. Now
the meter gets only voltage from the phase but can not sense a neutral point, it stops
and does not record energy. However, this issue has been redressed through the use of
digital meters which assume a neutral point in the absence of a neutral wire. But
replacement of huge number of existing meters is a long way off.
vii. Use of a Remote Control
In this method consumers, use car door remote control. The small switch which has an
on and off position and is usually used for turning the locks of car doors on and off is
installed inside the meters. When the consumer fears checking of meter by the DISCOs
staff he puts this switch on by using the remote control switch. The meter starts
functioning normally and it does not show any error. However, whenever the consumer
so desires, he can just press the button of the remote control and make the meter stop.
This method is hard to detect and efforts are underway to import special equipment
which can detect the installation of these relays.
It is worth mentioning that HESCO Authorities have detected a case in Hyderabad
where in two Ice factories were found to have tampered with digital meters and meters
were being operated with remote control.7
viii. Connivance with Discos Staff
Consumers some times in connivance with unscrupulous staff of the distribution
companies indulge in theft of electricity. It is usually done by keeping the readings
pending on the meters and reporting much smaller number of units than actually
indicated on the meters. After a few months the meter reading is either reversed, the
meter is changed or simply burnt to destroy the evidence.

7
Daily Dawn Karachi, Dated: 27th April, 2010
21
 2.3 Power Theft- Problems In Enforcement/CAUSES/Challenges/Issues
Theft of power is a direct theft of cash from the utilities companies. Its negative impact is not
restricted to the loss incurred by the companies but also to every other consumer who is paying
the bills honestly. This menace results in provision of poor quality service to the public on the
one hand and undue raise in tariff to meet the legitimate expenses of carrying out the utility
business. Following are the common challenges faced by the utility companies to enforce law on
the subject.
Lack of stigma in the Society.
Apparently respectable people who would never think of stealing some thing
even worth a thousand rupees would gladly engaged in the theft of electricity
worth hundreds of thousands of rupees. This theft is not only tolerated but
generally well accepted by the society. So much so that even religious scholars
are alleged to have indulged in stealing of electricity without any bad feelings or
remorse. A large number of worship places (mosques) are using electricity
without meters.
. Socio Economic Conditions
A large part of the population is poverty stricken. The prices of electricity have
been rising over time and the payment of bills has become out of reach for many
people in the society. Every increase in tariff causes an increment in the theft of
energy. This single point has made the theft of electricity so widespread that its
control is becoming impossible.
i. Difficulties In Monitoring Spread Out Area.
In some areas of Sindh and Baluchistan the consumers are spread out and it is
physically impossible to keep a proper watch over them by use of the existing
staff and resources available to the distribution companies. Most of the areas are
hard to reach and in some areas there are serious law and order issues involved.
iv. Weak Writ Of The Government.
In areas like NWFP, served by PESCO and TESCO, the writ of the Government
is very weak. The consumers of the area are not inclined to pay the bills as per
requirement of the law. The un-bridled presence of guns and absence of law and
order in these areas makes the functioning of the Distribution company most
difficult. In tribal territories served by TESCO, there is no possibility of
recovering bills from the consumers. In fact the consumers do not even allow to
install meters, Any meters, if installed at the premises, are promptly shot at and

22
 damaged. Illegal connections are obtained by the consumers frequently and used
at their own free will. The local staff is quite helpless in making any
improvement. Even in the Punjab the enforcement, at times, cannot be taken for
granted. It is worth mentioning that according to a report8 published in DAWN
“Villagers made the Gepco team hostage thrashed officials badly and kept them
in illegal detention for about two hours as ‘punishment’ for disconnecting
electricity connection of some outhouses in Dhol Bajwa-Phalora village, Pasrur
tehsil.
Officials of the Chawinda Sub-division Five went to the village to check an out-
of-order transformer on public complaints.
They disconnected some power connections with the ‘permission’ of affected
farmers to ensure the early restoration of power supply to the village. But some
villagers attacked the Gepco officials made them hostage at gunpoint, tortured
them severely and detained them for two hours in a house.
The accused got the power connections restored at gunpoint and released them
only when they sought apology”.
v. Lack of accountability
Poor enforcement of electricity laws is aggravating the theft problem. Powerful
persons and segments of society are proving too strong to be forced to abide by
the law.
vi. Low Literacy Rate
Illiterate population is indulging in power theft without realizing the gravity of
the offence and its impact on national economy.
viii. High tariff
Expensive electricity is one of the reasons enticing people to resort to
power theft as the people are not ready to give up their comforts for the sake of
morality and law.
A letter9 by an energy expert published in Daily Dawn indicates that “US mortgage
problem went out of control primarily because of high power tariff charged in the southern states
due to an abnormal summer, with peak charges for airconditioning during the high-tariff period
of the day. People had to pay utility charges (stealing power there is out of the question), but
then could not afford to pay mortgage for a few months, and that was the start of the collapse.
We use influences to steal power but this really cannot continue. The latest modus operandi to
8
Daily Dawn, Lahore, May 16, 2010
9
Daily Dawn, Lahore, April 12th , 2010
23
steal (with KESC’s connivance) is by installing many electric meters so that you are at the low
end of the tariff structure. A new double-storey house on a 600 sq yards plot (in KDA Scheme
No. 1, Karachi) has been given seven electricity meters. Another house in the same area is
repeating this exercise”.
2.4 Effective Enforcement Of Law In Restricting And Controlling Power Theft.
There is a direct co-relation between enforcement of law and controlling power theft.
One glance at data regarding line losses produced in table 4 clearly shows that areas where law
and order situation is better have shown much better results than those where the law and order
situation is not under control. The law regarding theft of electricity is quite strict and can be very
effective if implemented to its full extent. Needless to say that in the absence of effective
implementation the best of laws, rules and regulations can have no impact on the improvement
of any given situation.
Laws have been embodied in Electricity Act, 1910, Regulations of Generation,
Transmission and Distribution of Electric Power Act (NEPRA Act) and the consumer
Eligibility Criteria framed there under.
In terms of Section 39 of Electricity Act, 1910, theft of electricity is an offence, try-able
by the special courts established for this purpose. But the lack of training of the staff in
Distribution companies results in non-gathering of sufficient evidence to prosecute the alleged
offenders successfully. There seems to be an urgent need to modify the legal framework and
enforcement mechanism to remove legal impediments and to empower enforcement authorities.
Reportedly a Legal Consultant hired by PEPCO is revisiting all clauses of Electricity Act, 1910.
Further action for amending the act shall follow in the light of recommendations of the
Consultant.
It is worth mentioning that PEPCO authorities have caught 4 lakh 70 thousand power
thieves and have recovered from them Rs. 2.26 billion during the period July 2009 to Feb.
2010.10

Capacity building of the staff is quite necessary to take the theft cases to their
logical end. Abettors should also be identified and brought to justice in terms of Sections 39 and
39 A of the Electricity Act, 1910.

Non-cooperation by the Police contributes to the failure of cases in the Courts of Law.
Police High-ups need to be sensitized on this issue of prime importance

10
PEPO advertisment in daily Dawn Dated: 24th April, 2010
24
 CHAPTER-3

CREATION OF
DISTRIBUTION COMPANIES.

25
 In order to improve the efficiency of the power sector in Pakistan, a strategic decision
was taken by the government of Pakistan to privatize the electricity business in Pakistan.
Accordingly a Strategic Plan for the Privatization of the Pakistan Power Sector was prepared
and approved in 1992. The privatization process started at a slow speed. Kot Addu Power Plant
(1638 MW) was the first to be privatized in 1996. Initially 26 percent of the shares were
transferred to the private owner, and then later on 10 percent more shares were transferred to the
private owner. In December 2005 a majority stake (73 percent of shares) in KESC was sold to a
private investor. It is the major step although the process took many years to materialize. Next in
line is the distribution company, FESCO. It was intended to sell 56 percent of its shared capital
by the second quarter of 2006 but so far nothing has happened.
The Strategic Plan of 1992 sought to meet the following three critical goals:
1. Enhance capital formation,
2. Improve efficiency and rationalize prices, and
3. Move over towards full competition by providing the greatest possible
role for the private sector through privatization.

For the purpose of implementing this plan, the government decided to separate the Power
wing of WAPDA and PEPCO was formed. The purpose of PEPCO was not to replace one
vertically integrated entity WAPDA with another PEPCO. It was meant to facilitate and
expedite the splitting up of the distribution companies in to independent corporate entities, with
complete independence of operational and financial matters.

3.1 Main Functions Of Distribution Companies.

The distribution companies are completely independent corporate entities, registered

under the companies ordinance 1984. They have their own board of directors and are supposed
to function as a normal business organization. They have their own licenses issued by NEPRA
under NEPRA Act of 1997. This license allocates to each distribution company a service
territory, where the company is entitled to exercise a monopoly on the business of distribution of
power for fifteen years from the date of issuance of the license.

This monopoly, however, is not unbridled and is availed by the company only after
accepting the responsibility of providing certain services. Standards of operation and
maintenance have to be maintained by the company and it has to function under its own tariff.

26
NEPRA is entitled, as a Regulator to make sure that these minimum standards of service are met
by the company. In the absence of meeting these performance standards, NEPRA can impose
fines and ultimately even cancel the Distribution License of the company.

In practice however, these standards are not met and even the issue of meeting these
standards is not being agitated anywhere. Due to present power crises, people will be grateful to
even get some electricity and improvement in service would simply mean the availability of
power. But the standards are there and the mechanism to implement is also in place. We can
therefore hope that at some stage service to the consumers will also start to improve.

Each Distribution Company has the following main functions and activities.

a. Purchase of Power from NTDC.

b. Arrange Tariff Determination from NEPRA.
c. Maintain the existing 132 KV network and grid stations.
d. Construct new 132 KV transmission lines and grid stations.
e. Maintain the existing 11KV system and the associated transformer sub-stations.
f. Extend and install new 11KV feeders and sub-stations.
g. Maintain power supply to the existing consumers.
h. Sanction new connections.
i. Take meter readings and ensure billing according to tariff.
j. Ensure timely collection of monthly bills.
k. Maintain statistics of existing consumers and carryout load forecasting.
l. Procurement of material for development works and maintenance purposes.
m. Human Resource development.

3.2 Problems Of Distribution Companies.

PEPCO on its web site has elaborated the reasons for implementing restructuring
program of WAPDA in these words.

“The restructuring program of WAPDA's Power Wing is based on the new strategic
policies of the GOP and endorsed and supported by the donor institutions. The aim of this
transition is to install corporate and business culture through: adopting of good business
practices, enhancing productivity and efficiency, including customer orientation and service
27
culture, improving quality of services setting performance targets, reducing costs, theft and
wastage. This will be based on extensive use of information technology, management
information systems, monitoring and prudent decision making.

It has been decided that some of the functions currently being performed by WAPDA are of
national importance and will therefore continue to remain with WAPDA/GOP in the larger
interest of the country. …

It will be interesting to note that initial plan conceived was to divide WAPDA into
various corporatized units which would be owned by a holding company. Incidentally it was
also named PEPCO. During due diligence it was felt that creation of such a holding company
would only be a cosmetic change and lead to creation of yet another WAPDA. Therefore, the
need was felt to create an entity to plan and execute the whole process of transition and should
have no other role in the future.”

Apparently, none of the objectives stated above have been achieved. The political
interference in the administrative matters has continued un-abated. Five out of the nine
Distribution companies namely MEPCO, HESCO, QESCO, PESCO and PESCO are still
economically unviable. The experience of privatization with KESC has been a total disaster. It is
highly unlikely that any other loss making distribution company can be sold to the private
sector. Even if it is sold, there are thin chances of improvement in performance.

The companies were supposed to function independently with their own tariff
determination through an independent Regulator NEPRA. However if this theoretical model is
implemented, this will result in the determination of tariff say for HESCO that may be twice as
high as for FESCO. Similar will be the situation with other loss making companies. This will be
a situation that will be impossible to implement. The government has already instructed to keep
the tariff same for all the distribution companies.

The companies are not fully independent as yet. There is still significant interference in
the administrative matters by PEPCO. The present PEPCO managed by MD PEPCO and headed
by Secretary Water and Power as its Chairman is functioning on the pattern resembling to old
power wing headed by Member Power in WAPDA.

28
3.3 Successes and Failures Of Distribution Companies.

SUCCESSES
The distribution Companies, so far, have not been allowed to function independently as
corporate entities. In the absence of this, it may not be possible to enumerate any of the
significant successes specially from the functional point of view. The only success listed even by
PEPCO mentions the movement towards corporatization, determination of tariff and other
similar administrative measures. However, there is no complete independence of operations and
thus it is difficult to judge how the latest changes will impact the standard of service to be
provided to the consumers by these distribution companies.

FAILURES
As regard failures of the distribution companies, these are obvious. The basic purpose of
making these corporate entities independent was to make them self sustaining in their operations
through generation of appropriate amounts of revenues. The mechanism whereby the companies
can purchase and distribute power independently is in place but this has not caused any
substantial improvement in their performance. For example, we can analyze working of one of
the companies presently running in loss to understand the gravity of the situation. When we look
at data of say HESCO we find out that for every 100 units received by the company on average
only 65.3 units were sold during the year 2008-2009. Out of these units the recovery was made
for only 59%. This effectively means that of the total units received only 38% revenue is
recovered. Very similar figures are witnessed for other companies like PESCO, TESCO and
QESCO with MEPCO not far behind these companies. In order to make these companies self
sustainable huge investment to improve their distribution infrastructure are required. In addition
to that tremendous administrative improvements will have to be carried out. However, keeping
in view the law and order situation in the country expectations for administration improvement
are not very high.
Similarly, no perceptible improvement has occurred in the service provided to the
consumer. Despite the change of nomenclature mentality of the staff has stayed the same as was
witnessed in WAPDA.

29
 CHAPTER-4
CONCLUSIONS AND RECOMMENDATIONS
CAUSES LEADING TO POWER THEFT
4.1 Conclusions/Lessons Learnt
In the light of foregoing study we have reached the following conclusions:
1. WAPDA is having one of the largest integrated structure of transmission and distribution
lines
2. These lines are of 500 kv, 220 kv, 132 kv and 11 kv
3. Bulk of the line losses and power theft takes place at below 11 kv lines
4. Vastness of the jurisdiction and area makes it difficult to ensure full enforcement of
electricity laws
5. Break down of law and order like in FATA had made it impossible to arrest the power
theft
6. Bad law and order situation like in Khyber Pakhtunkhua, Balochistan and some parts of
Sindh province is hampering the efforts to prevent power theft
7. Over all weak writ of the govt. is also having adverse impact on the enforcement of
electricity laws
8. Large scale illiteracy in also contributing to the power theft
9. Repeated hike in tariff rates is enticing the people to resort to power theft
10. Bad socio-economic conditions like poverty and unemployment also contribute to power
theft
11. Connivance of Disco Staff with unscrupulous elements also facilitates power theft
12. Inadequate training in electricity enforcement laws/techniques, to the Enforcement Staff
makes theft controlling efforts more difficult
13. Bulk of the energy meters are old fashioned and easy to tamper with
14. The level and scale of public awareness campaign is incompatible with the magnitude of
power theft
15. Participation of public representatives and prominent persons of the area is almost non-
existent.
16. Non-cooperation by the police authorities in particular and provincial governments in
general makes the task of power theft control difficult
17. The legal side of the power utility is insufficiently manned

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 4.2 SOLUTIONS
Recommendations-The Way Forward:
To minimize and to eliminate the power theft the following actions are recommended:
1. Identification of high quantum loss feeders and their combing on priority basis in
descending order be carried out which will help to control theft of electricity.
2. Surveillance & checking of metering equipment be accelerated and be accomplished as a
special task
Checking Priority
a) Industries utilizing energy as raw material such as furnaces, re-rolling
mills and plastic factories etc.
b) Seasonal industries such a ginning factories, Ice factories/cold storage and
Rice Sheller
c) High rise buildings, hotels, restaurants, marriage halls etc
d) Tube well consumers
e) General A.C. premises
3. Action To Be Taken On The Discrepancies Noticed During Checking.
a) Defective / damaged/Sluggish Meters Immediate replacement and
legitimate billing.
b) Case of pilferage be taken seriously.
4. In Case of Pilferage through meter or by passing the meter.
a) Immediate action as per standing instruction of Department & Law.
b) Serving of detection Bill.
c) Re-securing or replacing the meter for future correct consumption.
d) Exemplary Punishment to officials involved in theft.
5. In case of Un-authorized connection
a) Immediate disconnection.
b) F.I.R where required.
6. Proper installation of meters
a) Shifting of Metering Equipment outside the consumer premises.
b) Installation of meters on structures/poles using designed steel strips.
c) Where it is not possible to install the meter on structure/pole, the Meters should
be installed on outer periphery of premises & should be properly grouted.
d) Meter should be in a balanced vertical position.
e) No joint in the incoming cable.

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f) Neutral of all meters will be earthed properly.
7. Conventional Seals of meters be replaced with high tech seals at the time of
manufacturing.
8. Campaign of securing meters be launched on war footing. Special Security Slips be
employed on the strip of the meter and body of the meter to control fiddling with the
meters for restricting the installation of gadgets in meter and installation of dummy
meters for a span of time during the month. Special security slips having Ref. No. Meter
No., Name and address , tariff for each and every customer should be got printed and be
affixed on the meter/M.S.Bs to avoid conventional modes of theft of electricity. These
security slips should be bar coded, weather protected. It will also help in identification of
connection by Meter Readers and Surveillance Teams.
9. Installation of smart meters: Installation of smart meters tantamounts to clamping
down on power theft. Smart meters are digital versions of the spinning electric meters.
These meters virtually eliminate fraud by detecting when a meter is tampered with or
when a wire is illegally hooked to a distribution line.
10. Meter Reading
a) Ensuring proper Meter Reading through Meter Readers through Meter
Readers by exercising prescribed checks.
b) MRS’s follow up as per commercial procedure manual.
c) Strict vigilance on the activities of meter reading staff.
11. Monitoring.
a) Monitoring of consumption data of connection through maintaining proper record
& exercising of checks on supervisory staff at various levels.
b) Monitoring of consumption through installation of check meters on General Duty
|transformers.
c) Weekly Readings of seasonal connections, Furnaces, Plastic factories, A.C
Premises & doubtful Connections.
12. Maintenance of Record
a) Remote Sensing Meter Reading be introduced
b) Consumption Data register of Seasonal Connections, A.C Premises and Tube-
well consumers.
c) Rise & Fall consumption Register
d) Percentage check register of S.E, XEN, SDO & Meter readers.
e) Meter securing register

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 f) Batch wise units recorded / billed register.
13. Billing:
a) Electricity consumption be modulated through time-based tariffs. There should be
different tariffs for peak usage periods and the odd hours.
b) Prompt billing of all newly installed / reconnected connections.
c) Billing of illegal & disconnected premises using electricity
d) Proper billing of all temporary connections
e) Static Data Meter Analysis Centers (SDMAC) be established immediately at circle
level to download data of all defective & LCD washed meters removed from site.
Downloading of data will help in arresting trend of damaging static meters. It will
generate revenue by detecting pending units in EPROM of the meter.
f) Discreet weekly reading of Industrial, Commercial, tube well and three phase
domestic connections be stares through surveillance teams. It would help in
controlling theft of electricity.
g) Quality of the meters should be improved by injecting state of art meters in the
system.
h) Fortnightly billing to the big customers having load more than 500 KW should be
started so that pilferage of the electricity be reduced.
i) Consumer census be carried out to identify the un-authorized, missing and out of
walk connections. Through this census, complete data of connections including
connected load, capacity and production of Mill/Factory /Production unit will be
obtained. It will help to assess the bench mark consumption of the connections
checking of the connection/site would be required.
j) The Automated Meter Reading System should be launched in a phased program:
first priority should be given to industrial, then commercial and onwards. It would
help to arrest increasing trend of pilferage of electricity.
k) In the first instance automation of the meter reading through hand held units (HHU)
should be started. The reading once entered by Meter Reader in HHU will not be
modifiable.
l) Out sourcing of hard areas for control of losses be initiated in each DISCO.
m) Monitoring of losses at micro level/transformer level be started by installing check
meters at general duty transformers.
n) Securing of L.T Bushes of Independent Transformers be carried out to avoid direct
taping from the transformer.

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 o) Regularization of Un-authorized Extension of Loads will facilitate in controlling the
theft of electricity.
14. Motivation and Incentives:
a) Incentive against reduction of losses
b) Accountability of meter reading staff in case of increase in losses
c) Periodic workshops to educate & train the staff, induce the sense of responsibility
and accountability.
d) Reward for reporting and detecting theft of electricity.
e) Motivation of staff through awarding meritorious certificates/shields and cash
prize for outstanding performance.

15. Printing on electricity bills the request to the consumer not to indulge in power
pilferage.
16. Using call centers as information centers for reporting theft of electricity by public and
employees.1.25 All common delivery points (CDPs), Grid incoming points and 11 KV
feeders are required to be properly metered, secured and observe reading regularly to
analyze the quantum of power loss and theft of electricity. This exercise will lead to identify
the area with abnormal losses, will help to take remedial measures. Transformers level
metering should also be implemented to identify high loss area at micro level.
17. Persons involved in theft of electricity be given Wide publicity in media and a red book
of such persons should be maintained at Sub-Division /Division level.
18. Communication program be launched for eradication of theft of electricity through
electronic and print media advertisements, posters and videos, and a public out reach
program through visits by special teams and regular public meetings by DISCOs Managers.
The teams should tell the people that it is a social, moral and religious sin and give everyone
the opportunity to obtain an authorized connection on the spot after paying the required
charges. They should also explain the DISCO’s deteriorating financial situation and effect of
electricity theft on their costs and tariffs.
19. The Labor Unions should also be taken into confidence about the campaign launched for
eradication of theft and making them clear that collusion by staff in this regard is a criminal
offence.
20. To have more information about theft of electricity, willing employees and the persons
from public should be encouraged to report such malpractices.
a. The identity of all these persons should be kept confidential.

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 b. On getting report for any theft of electricity, immediate raid(s) should be
conducted by the pre-designated raiding teams.
c. If raids are successful, the token incentive equivalent to 1% of detected amount
should be immediately sent to the reporter and balance would be awarded at the time
of realization of detection bill.
21. The persons who are motivated in helping distribution Companies to control theft of
electricity be registered and given a name of “Friends against Power theft.” They may be
encouraged through monetary incentives issuance of loyalty Cards and certificates for
rendering services to the nation/power utilities.
22. To create awareness and ownership in the general public, representatives and prominent
citizens like retired judges, retired principals and prayer leaders of worship places be
included in the area surveillance committees at the district Level to control power theft.
Senior most S.E of the District should head the Committee. These committees be notified
and widely publicized.
23. Periodic inspection of field units by Managers/Senior Managers be regularly ensured to
monitor their performance regarding control of theft of electricity and inspection reports be
sent to next senior for appraisal.
24. Methods to save energy should be taught in educational institutions in an easy and
friendly manner as part of the curriculum
25. Introduction of Uniform & departmental Identity cards for Meter Readers and Line staff
be ensured.
26. ROLE OF PROVINCIAL GOVERNMENTS
a) Sufficient civil and criminal deterrent are needed to control theft of electricity for which
active cooperation/support from law enforcing agencies is required and Provincial
Government(s) can help a lot in this regard.
b) Because of traditional apathy on part of Police to register cases against illegal abstraction
of energy and to thereafter investigation, prepare challans and to follow up prosecution,
Utility Managers are averse to instigate/institute such complaints with Police.
Instructions by the Provincial governments(s) to the DPOs PROs and Provincial Police
Officers (IGs) to give priority to power theft cases can help to curb this menace
substantially.
c) Provincial government(s) may be requested to notify the following:-
i) Providing immediate assistance of Police to raid the premises where theft is
reported along with directions to the DPO and other Police high ups for

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 immediate registration of FIR speedy investigations of FIRs & subsequent
submission of Challans for prosecution.
ii) Provision of administrative support to Distribution Companies against power
thieves.
iii) There should be a separate cell in IG’s office headed by an officer of SP’s
rank to deal exclusively with power theft cases. In each district there should
be a cell headed by a DSP rank officer to extend assistance to electricity
authorities in apprehending and prosecuting the power thieves
iv) Electric Inspectors should strictly adhere to the legal provisions according to
the electricity act while receiving the complaints against defective meters and
disputes regarding electricity bills.
v) Creation of Power thanas for Distribution Companies to register FIRs and
subsequent legal actions.

27. Structure of Power Thanas

a. One Legal SP is required at company level. He will coordinate with provincial

police authorities and oversee the investigation of theft cases registered at Power
thanas and submit challans in the court of special magistrates for prosecution.
b. Power Thanas at Division level (Civil District Level) with following staff should
be established.
i. Inspector 01
ii. Sub Inspector 08
iii. Assistant Sub-inspector 20
iv. Moharrar 06
v. Constables 50
These thanas should have a legal cell headed by one Sub-inspector. The power
theft cases should be promptly attended to and the offenders should be prosecuted
after gathering sufficient evidence against them.

28. ROLE OF LEGAL DEPARTMENT AND THE LEGAL CONSULTANTS

a) The legal department in DISCO should deal with the matters related to theft of
electricity on war-footing basis.

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 b) For court related cases, the Engineers along with legal consultants should jointly
attend the courts to represent the cases in a robust manner.
c) To enlist panel of advocates in technical matters, technical seminars be arranged
at Company H/Q, it will be highly appropriate if workshops be held with the
participation of field officers, Legal officials & advocates on the matters of legal as
well as technical nature relating to the subject eradication of theft of electricity.
d) Leading advocates be hired to represent Distribution Companies in courts of law
as huge amounts are involved in power theft cases. Besides, convictions in some
cases will serve as a deterrent and the people will think twice before indulging in
power theft.

29. TARGETS

a. At least 10% annual reduction in line losses including the share of power theft
from existing level (2008-09) be fixed as target for all distribution companies.
Separate targets for technical/transmission losses be fixed by the companies keeping
in view the loss level of the sub division/division.
b. This target should be apportioned to Sub Division level.

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 BIBLIOGRAPHY

a. Articles in Daily Dawn Lahore / Karachi dated May 15, 2010, April 28, 2010,
May 17, 2010
b. Institutional Reforms and Electricity Access
www.afrepren.org/project/gnesd/esdsi/ait.pdf
c. South Asia Regional Country Analysis Brief www.eia.doe.gov/cabs/bhutan.html -
d. Electricity Sector in India- Wikipedia, the free encyclopedia
en.wikipedia.org/wiki/Electricity_sector_in_India
e. South Asia Analysis Group Paper no. 3366
http://www.southasiaanalysis.org/%5Cpapers34%5Cpaper3366.html
f. Pakistan Electric Supply Company-PEPCO, www.pepco.gov.pk/
g. The World Bank www.worldbank.org/
h. Data & Research- World Bank, econ.worldbank.org/
i. NEPRA www.nepra.org.pk/
j. WAPDA ANNUAL REPORT, 2007 - 08 PEPCO Progress Report (2008-09)
Statistics Directorate WAPDA House, Lahore
k. State Bank of Pakistan’s Annual Report 2008-09
l. Interview (semi structured) with Mr. Wazir Ali General Manager Monitoring and
Surveillance PEPCO, WAPDA House, Lahore

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