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An Empirical Study of Electricity Theft from Electricity Distribution Companies in Pakistan

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  • Faisal Jamil

    (National University of Sciences and Technology, Islamabad.)

  • Eatzaz Ahmad

    (Faculty of Social Sciences, School of Economics, Quaid-i-Azam University, Islamabad.)

Abstract

Electricity theft is a common problem in many countries and energy worth billions of dollars is stolen annually from electricity grids. The problem has socioeconomic, political, environmental and technical roots, but the solution is generally sought solely through technical measures. This paper empirically investigates the effects of various factors including electricity price, per capita income, probability of detection, fines collected from offenders, weighted temperature index and load shedding, that may explain the theft. The study employed annual panel data obtained from nine electricity distribution companies in Pakistan for the period 1988–2010. The study estimates the Fixed Effects models through the least squares dummy variable (LSDV) technique and Generalised Method of Moments (GMM). Our results indicate that per capita income has significant negative and electricity price a positive effect on electricity theft with sufficiently high coefficient values. The probability of detection variable appears with a positive sign in both estimations indicating a poor deterrence. The results of LSDV show a positive impact of fine on conviction on electricity theft. But in GMM estimation, this variable appears with a right sign. The results from both models are robust in the case of load shedding and temperature variables. The findings show that economic variables are most significant in explaining electricity theft. The findings may also be applicable in other developing countries where hefty amounts of revenues are lost due to electricity theft.

Suggested Citation

  • Faisal Jamil & Eatzaz Ahmad, 2014. "An Empirical Study of Electricity Theft from Electricity Distribution Companies in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 53(3), pages 239-254.
    • Handle: RePEc:pid:journl:v:53:y:2014:i:3:p:239-254
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    Cited by:

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    3. Nadeem, Ahmad & Arshad, Naveed, 2021. "A data-driven approach to reduce electricity theft in developing countries," Utilities Policy, Elsevier, vol. 73(C).
    4. Yakubu, Osman & Babu C., Narendra & Adjei, Osei, 2018. "Electricity theft: Analysis of the underlying contributory factors in Ghana," Energy Policy, Elsevier, vol. 123(C), pages 611-618.
    5. Jamil, Faisal, 2018. "Electricity theft among residential consumers in Rawalpindi and Islamabad," Energy Policy, Elsevier, vol. 123(C), pages 147-154.
    6. Wabukala, Benard M. & Mukisa, Nicholas & Watundu, Susan & Bergland, Olvar & Rudaheranwa, Nichodemus & Adaramola, Muyiwa S., 2023. "Impact of household electricity theft and unaffordability on electricity security: A case of Uganda," Energy Policy, Elsevier, vol. 173(C).
    7. Yousef Abdel Jawad & Issam Ayyash, 2020. "Analyze the Loss of Electricity in Palestine Case Study: Ramallah and Al-Bireh Governorate," International Journal of Energy Economics and Policy, Econjournals, vol. 10(1), pages 7-15.
    8. Miller, Mark & Alberini, Anna, 2016. "Sensitivity of price elasticity of demand to aggregation, unobserved heterogeneity, price trends, and price endogeneity: Evidence from U.S. Data," Energy Policy, Elsevier, vol. 97(C), pages 235-249.
    9. Jamil, Faisal & Ahmad, Eatzaz, 2019. "Policy considerations for limiting electricity theft in the developing countries," Energy Policy, Elsevier, vol. 129(C), pages 452-458.
    10. Adongo, Charles Atanga & Taale, Francis & Bukari, Shaibu & Suleman, Shafic & Amadu, Iddrisu, 2021. "Electricity theft whistleblowing feasibility in commercial accommodation facilities," Energy Policy, Elsevier, vol. 155(C).
    11. Sajad Ali & Min Yongzhi & Wajid Ali, 2023. "Prevention and Detection of Electricity Theft of Distribution Network," Sustainability, MDPI, vol. 15(6), pages 1-19, March.
    12. Otuoze, Abdulrahaman Okino & Mustafa, Mohd Wazir & Abdulrahman, Abdulhakeem Temitope & Mohammed, Olatunji Obalowu & Salisu, Sani, 2020. "Penalization of electricity thefts in smart utility networks by a cost estimation-based forced corrective measure," Energy Policy, Elsevier, vol. 143(C).

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