Electricity in India long dogged by theft, waste, experts say

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Long before blackouts left more than 600 million people in the dark across India this week, analysts inside and outside the country had been fretting over its beleaguered power system.

The problems are manifold: India has ramped up capacity to generate power, but much of it is unused because fuel is lacking or the transmission system can’t handle the added load.

A single company owned by the government provides the vast majority of the coal that many power plants rely on, leaving them vulnerable when it falls short of production targets. India boasts some of the biggest coal reserves in the world, but it has been forced to import tens of millions of tons from elsewhere because of inefficiencies at the state company, experts say.

Shortfalls are also driven by fuel companies refusing to sell their product at the low prices insisted on by the government, said Pramit Pal Chaudhuri, a member of the Asia Society Global Council. India partially subsidizes diesel and other fuel, driving down the cost of electricity. Diesel, for instance, costs roughly 33 rupees a liter, rather than the 46 rupees it might otherwise sell for, according to a report this year by the International Institute for Sustainable Development.

The country also provides electricity free to farmers, a politically popular move. Chaudhuri said the agricultural sector wastes “huge amounts of power” as a result.

On top of that, almost one-third of the power generated in India is lost to damaged equipment or theft, nearly three times more than deemed acceptable by the International Energy Agency, wrote Matthews International Capital Management research analyst Siddharth Bhargava in April.

Policing those thefts can be politically dicey: Poor slums are often tapping the electrical lines for free and enforcement might trigger public anger. There are also hints that government officials have looked the other way at electricity theft to help their political fortunes, said Milan Vaishnav of the Carnegie Endowment for International Peace, with research showing spikes in theft before elections.

State electricity boards have been chronically strapped as a result. Raising tariffs is so unpopular that some of the panels have opted for rolling blackouts instead as they struggle to cover their costs, Bhargava wrote.

An aging grid hasn’t helped. The problems have dogged the Indian electricity system for so long that many people rely on generators, Vaishnav said, damping the impact of the blackout. Others never had power at all.

“People kind of shrug their shoulders and say, ‘You learn to work around this,’ ” Vaishnav said.

For the record, 7:49 p.m. July 31: Cost per liter of diesel was changed from dollars to rupees.

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-- Emily Alpert in Los Angeles and Mark Magnier in New Delhi