For a long time we have been hearing of the huge losses suffered by our State’s Power Development Department on account of transmission and distribution (T&D) losses. Recently, I came across some interesting statistics related to these losses. These statistics are in public knowledge but since we have always been shared these as percentages (of T&D losses) and not the absolute figures, one did not appreciate the magnitude of the problem or if you allow me to use the word, the extent of the malice. The real understanding of the extent of the problem comes only when one looks at the absolute figures rather than at the percentages. In this regard, the statistics provided in the Economic Survey 2017, Government of J&K, are simply revealing. Even a quick look at the financials exposes the shocking state of affairs.
During the year 2016-17 J&K PDD purchased a total of 1,534 crore units of energy (this figure includes 132 crore units of free power) for Rs 6,225 crores (this amount includes J&K PDD establishment and O&M expenses). As against this the amount billed to the consumers by PDD was only Rs 2,272 crores (only 36% billed) while the revenue realized from them against this billing was only 75% of the amount billed i.e. Rs 1,715 crores. Notwithstanding the argument that PDD might collect some of this difference, between the amount billed and amount realized, this amounts to a whopping shortfall in collection of more than Rs 4,500 crores with 90% of this shortfall being attributed to T&D losses. If one was to put a value to 132 crore units of free power received (from NHPC) the shortfall in revenue collected would exceed Rs 5,100 crores instead of 4,500 crores, but for now let us use the lower shortfall figure of Rs 4,500 crores for our discussion.
In simple terms for every Rs 100 of power purchased by J&K PDD they are able to collect just Rs 28 from the consumers and the balance Rs 72 is attributed to T&D losses (and commercial losses) and this huge amount is borne/funded by the government. If one was to exclude the free power from the equation the figures would be far more alarming with shortfall in revenue being borne by government reaching Rs 75, i.e. 75%.
While it is a common and standard refrain of the JKPDD to tag this shortfall in revenue collection as T&D losses the fact is that a major portion of this is certainly pilferage and power theft. While nobody disputes that the existing distribution system is outdated and needs a complete revamp but then is it not the responsibility of the J&K PDD to fix that?
But for now let us not digress into that debate but instead try and understand what the collection (recovery) of these Rs 4,500 crores could mean for the State; for the state’s economy and its people. To get an appreciation of the huge amounts at stake, I am sharing below a few examples of investments, existing and potential, in infrastructure, health care and education which will hopefully put things in a proper and better perspective.
i. The total cost of first externally aided (ADB funded) MPIR of J&K ERA projects, started in 2005 was only Rs 1,600 crores spread over 4 years (the fact that the projects could not be completed even after 8 years is a different story). Thus the actual average annual spend was 200 to 300 crores. So imagine we could have had about 15 to 20 such ADB projects running concurrently, every year, all over J&K, if the state government did not have this power theft to pay for.
ii. The much hyped Ram Bagh – Jehangir Chowk flyover, started in 2013 and yet to be completed, costs Rs 350 crores with an average annual spend of Rs 70 crore. Imagine we could have 60 such prestigious projects running concurrently, every year, across various cities and towns of the state only if we were not suffering the cancer of power theft.
iii. The total annual spend in Kashmir Division on upgrading and macadamisation of roads is less than Rs 500 crores. Considering a similar amount for Jammu, it is clear that every possible highway, road, lane and track could be macadamised across the whole state in a single year itself if only we could prevent this power theft and collect the dues.
iv. The total spend on Dal and Nagin, including rehabilitation of families and providing for their resettlement colonies, in the last more than three decades has been less Rs 600 crores. If we could plug the power theft just imagine how much more we could afford to spend on restoration of Dal, Nagin Lakes and other water bodies. We could spend in a single year 8 times as much as we have spent on them in the last three decades to maintain these water bodies – alas but for our stealing of power.
v. With regard to flood mitigation and control projects (including acquisition of land for flood spill channel), the total project cost is estimated at less than Rs 500 crores. The contract for dredging of Jhelum, which was to provide a certain level of flood protection to the valley, was fixed at only Rs 46 crores i.e. 1% of our annual value of power theft in the state. If we could prevent this power theft we could, even with one year’s revenue, undertake projects 8 times larger than currently envisaged. Even the Dogripora canal could look like a doable project.
vi. Talking of hydro power projects, with an equity of Rs 4,500 crores we could start developing 1,500MW of hydro projects, every year. In less than 10 years we could make 7,500MW operational and in next 5 years we could make another 7,500MW operational. That is to say with a loss we suffer on account of power theft in a single year we could develop more than 30% capacity than has been developed in more than the last 110 years when Mohra HEP was commissioned in 1905. In 15 years we would have fully exploited the hydro power potential of the State.
vii. Each of the much hyped AIIMS to be set up in the state are estimated to cost Rs 2,000 crores. Instead of arguing whether an AIIMS should be set up in Kashmir or Jammu, imagine we could make operational two AIIMS every year if we could do away with power theft in the state. In just five years’ time every second district in J&K could have an AIIMS.
viii. The average cost per bed of a super specialty hospital is a little less than Rs 1 crore. If we could prevent this power theft we could construct a 4,500 bedded super specialty hospital every year. Just to put it in better perspective, the total bed capacity in tertiary care associated hospitals (SMHS, LD, B&J, CD, GB Pant and Psychiatry) is only 2,700 beds, i.e. a little over half of that number. It is beyond me to even imagine how super specialty hospitals with bed strength of 4,500, build with just one year’s revenue collected post plugging of power theft, would revolutionize the heath care in the state. But this is possible if and only if we plug the power losses and theft.
ix. Instead of our students having to go to Karnataka or Bangladesh and paying capitation fees in lakhs of rupees to a pursue a medical degree we could set up medical colleges in each of the districts of the state, which do not currently have one, with just one year’s savings from the power theft.
x. The average cost of setting up a central university is about 250 crores. With just one year’s collection of revenue for the power currently stolen we could set up a university in each of the 20 districts of the state which do not have one.
So much for major capital intensive projects. If the government could ensure distribution of power without theft and collect the revenue thereof, it would be in a position to review the current budgetary allocations in various important sectors and possibly refix the priorities. A case in point is the allocations on tertiary health care in Kashmir. The total outlay on diets and medicines (including labs, tests, scans, blood bank etc) in associated hospitals mentioned above, having a bed strength of about 2700 beds, is less than Rs 30 crores, i.e. about 0.66% of the losses suffered on account of power theft. If the power theft could be plugged, the government could afford to increase this annual allocation to say Rs 60 crore and thereby possibly provide, completely free, all kinds of medicines including the very expensive ones like for cancer treatment, free stents and free pace makers. Possibly even free MRIs and CT scans.
And mostly importantly, we would enjoy an uninterrupted 220 V (and not 100 V most of us are currently getting) 24×7 power supply throughout the year.