Power theft in Pakistan’s energy sector is a critical challenge that severely undermines the sustainability and reliability of the country’s electricity supply. Federal Energy Minister Awais Leghari said that the country is suffering a loss of Rs 600 billion a year due to electricity theft. One common method of power theft is direct line tapping, where consumers illegally connect to power lines upstream of their energy meters, resulting in unmeasured energy consumption mostly without proper switches. Direct line tapping not only leads to significant financial losses for power companies but also poses severe safety risks, causing devastating electrical fires or potentially fatal electric shocks, frequent blackouts, and voltage fluctuations that damage electrical equipment.
The economic impact of power theft extends beyond the immediate losses, to increasing fault ratios, and higher circular debt, discouraging investment in the energy sector, and hampering overall economic growth. Addressing this issue requires a multi-faceted approach, including improved monitoring technologies, stricter law enforcement, public awareness campaigns, and initiatives to make legal electricity connections more accessible and affordable. Across Pakistan, distribution companies are cracking down on theft in collaboration with law enforcement agencies and the FIA.
Power theft, often referred to as non-technical losses, includes illegal connections, meter tampering, and billing fraud. According to estimates, Pakistan loses 20-30 percent of its generated electricity to theft and technical inefficiencies. These losses translate into billions of rupees in revenue each year, severely impacting the financial health of power distribution companies (DISCOs) and the national grid.
Power theft and non-payment of bills directly reduce the revenue of DISCOs, leading to economic instability. It is estimated that power theft accounts for 10-15 percent of the total revenue loss for these companies annually. This financial strain limits their ability to invest in infrastructure upgrades, maintenance, and expansion projects, all of which are necessary for a sustainable power supply. The resulting lack of investment perpetuates a cycle of inefficiency and poor service quality.
Pakistan can enhance the performance of its energy sector, by combining technological, regulatory, and community-based approaches into one robust and efficient power policy that caters to the nation’s economic growth, social development, and environmental sustainability, simultaneously.
Areas where people protest due to extreme load shedding often turn out to be the areas with the highest number of non-paying customers, or very heavy outstanding dues. The penalties for power theft should be substantial enough to deter individuals and businesses from engaging in such activities. This could include higher fines and longer imprisonment terms for those caught stealing electricity. Establishing special courts or fast-track mechanisms to handle power theft cases can ensure swift justice. This would not only act as a deterrent but also reduce the backlog of cases in regular courts.
Addressing power theft requires a multifaceted approach that combines technological advancements, regulatory reforms, and community engagement. Efforts are ongoing with the implementation of smart meters and advanced grid management systems. Smart meters provide real-time data on electricity consumption, enabling utilities to detect anomalies and unauthorized usage quickly. Advanced grid technologies enhance the monitoring and control of the distribution network, reducing opportunities for theft. K-Electric in Karachi has already deployed smart meters on its PMT network and for industrial customers. IESCO and LESCO are following suit by deploying smart meters after raising funding from different financial institutions such as the Asian Development Bank (ADB).
However, legal and regulatory measures are extremely crucial to deal with power theft. This includes stringent penalties for offenders, streamlined legal processes, and better enforcement mechanisms. In 2023, 550 FIRs were registered in police stations in Karachi. Power theft was estimated to be 8.2 million units of electricity, amounting to PKR 418 million. An FIR was also lodged against an illegal network operator stealing electricity from KE to power 150 shops in the Hub area.
Last year, the leaked utility court documents showed that K-Electric had Rs 40 million in pending dues, with the top 21 accounts owing Rs 30 million collectively. Between 2019 and 2023, KE registered 951 cases, with 630 still awaiting trial. Non-bailable arrest warrants have been issued in 35 cases. Before the 2016 amendments to the Criminal Act, KE filed 588 FIRs for theft, of which 587 were successfully prosecuted and settled. Collaboration between law enforcement agencies and distribution companies must be bolstered with a comprehensive and strict legal framework, so that offenders can be prosecuted swiftly and decisively.
Engaging with local communities and raising awareness about the consequences of power theft can foster a culture of compliance. Over the last fiscal year, K-Electric set up 309 facilitation camps which collectively assisted 94,000 customers in clearing their outstanding dues and also applying for new connections to become regularized customers. More such awareness campaigns can help highlight the impact of theft on service quality and sustainability.
Power distribution companies are also businesses and cannot continue to provide uninterrupted electricity if they are not receiving commensurate payment for its usage. They have to resort to loadshedding on economic grounds to manage the gap between supply and demand created due to theft. The situation has reached a critical point where reports indicate that the Power Division is redefining loadshedding to be conducted based on Aggregate Technical & Commercial Losses. This policy places a greater onus on the communities and the distribution companies supplying them electricity to reduce the losses and counter electricity theft. Strengthening the governance structures within the power and public sector is vital. This includes improving transparency, reducing corruption, and enhancing accountability at all levels.
Pakistan can enhance the performance of its energy sector, by combining technological, regulatory, and community-based approaches into one robust and efficient power policy that caters to the nation’s economic growth, social development, and environmental sustainability, simultaneously.
