Free power to agriculture is often cited as one of the major reasons for poor performance of state electricity boards (SEBs). There was, however, always a sneaking suspicion that the farmers were a convenient scapegoat for sins not committed by them.

These fears have now been proved. An energy audit conducted in Andhra Pradesh reveals that though the energy consumed by pumpsets in the state was reported to be 13,000 million units, actual consumption was just 8000 million units. Assuming a rate of just Re 1.5 /unit, at which even the cost will be barely covered, the revenue loss is Rs 750 crore.

The loss of APSEB, without accounting for subsidy, for the year 1996-97 was Rs 720 crore. This simply means that if the theft of power hidden as agricultural consumption alone can be brought within the level of 10-15 percent, the majority of the SEBs will have a positive rate of return. This is because APSEB has the fourth highest loss among all SEBs and the figure of loss concealed as agricultural sale (in percentage terms) will be the same across the board.

The fact of the matter is that politicians have found a major vote bank in the free supply of power. According to a top official of Independent Power Producers of India(IPPAI), farmers in Punjab are willing to pay up to Rs 3 per unit (the rate for residential consumers in Mumbai is lower) but are provided with free power. The impact is obviously felt by industry. Kerala had imposed 100 per cent power cut on low, high and extra high tension consumers. Karnataka faced a similar situation.

According to CMIE figures, only one State Electricity Board in the country is able to generate a positive rate of return (RoR). Himachal Pradesh has managed a 4.4 per cent RoR, while the pampered state of Jammu and Kashmir has a negative RoR of as high as 52 per cent.

Total losses of SEBs during the year 1996-97 mounted to Rs 10,000 crore (without subsidy). One of the main reasons holding up power sector reform is the fact that politicians have a vested interest in turning a blind eye to the theft of power.