Patna, Sep. 10 (IANS): Contrary to treating electricity as a right, governments in low-income countries should treat it as a private good, according to an international report prepared after studying the power situation in Bihar.
This will help resolve the problem in Bihar, says the study released on Tuesday.
According to the study, less than 50% consumers of all income levels paid their electricity bills. It shows bigger consumers are as likely to fail to pay bills as smaller ones and it’s not an issue of an expensive redistribution programme, but of the entire electricity market.
Also, the power authority in Bihar collects just 30% of the cost of supplying power and less than 20% of the official rate. Thus, the distribution firms lose INR 70 for every INR 100 of power supplied. They, therefore, limit their losses by limiting the supply — no consumer gets 24 hours of electricity, the average consumer gets about 12 hours a day, and some areas only 6 hours a day.
“Surprisingly, we find no relationship between payment rates and the amount of electricity supplied to a given area,” said Burgess, IGC Director and LSE Professor. “It’s a serious indication that the power market is not functioning effectively,” Burgess said.
It’s a widespread belief in developing countries that electricity is a right to be enjoyed by all. In practice, this social norm results in customers not paying their bills, stealing electricity and bribing bill collectors — behaviours the government often tolerates.
Thus, power utilities lose money on every unit of electricity sold, causing large financial losses that limit their desire and ability to maintain infrastructure, provide reliable power and invest in expanding access to electricity. And as customers then receive poor energy supply, they are even less likely to pay their bills.
The study, conducted by the International Growth Centre (IGC) of the London School of Economics & Political Science (LSE), the University of Chicago and Yale with support from the Bihar government. The research was led by Robin Burgess (LSE), Michael Greenstone (Chicago), Nicholas Ryan (Yale) and Anant Sudarshan (Chicago).