Project at a glance

• In Bihar, 45 percent of power consumed is not paid for and is unmetered, unbilled, or pilfered
• Power distribution companies in collaboration with EPIC-India and other collaborators, launched a group incentive scheme to reward bill payments with improved supply, and to disincentivize non-payment
• The pilot, which was conducted across eight districts in Bihar, will be scaled up to cover the rest of the state

Why this study

Power sector is widely viewed as one of the biggest constraints on India’s economic growth. Almost half of the power drawn from the grid is not paid for and is unmetered, unbilled, or pilfered. In the Indian state of Bihar, 45 percent of power consumed falls in this category.

Working with the state-owned electricity distribution companies in Bihar, EPIC-India and J-PAL South Asia are testing an innovative group incentive program that links the amount of electricity supplied to groups of industrial and residential consumers to their overall performance in paying for the electricity they consume.

Approach

The experimental design of the project targets reducing electricity losses in order to expand power supply. A group incentive scheme was initiated by power distribution companies in Bihar in collaboration with EPIC-India researchers and other collaborators, which rewarded bill payments at the feeder level with improved supply and, similarly, disincentivized non-payment.

The primary objective was to ration better, recognize that non-payment was a collective action problem, and to try to change the social norms about payment, including low-level collusion and collective problems.

The large-scale pilot was conducted across eight districts in Bihar—Bhojpur, Buxar, Patna in South Bihar and Saran, Darbhanga, Siwan, Purnea, and Katihar in North Bihar—impacting over 28 million electricity consumers in the state.

Findings

As the proportion of paid electricity increases, the hours of electricity supplied to that community also increases. Both the implementing partners—North and South Bihar Power Distribution Company Limited—have shown strong interest in scaling up the study from the eight districts to the rest of Bihar.

While the work on analyzing data (primary and administrative) from the study continues, the distribution companies have expressed interest in continuing to implement and monitor Revenue-Linked Supply Scheme themselves in study districts. The researchers are assisting them in achieving this.

This project is also supported by Governance Initiative, International Growth Centre, Urban Services Initiative, and Private Enterprise Development in Low-Income Countries.

Background Research –  The Consequences of Treating Electricity as a Right