Electricity theft among residential consumers in Rawalpindi and Islamabad

Highlights: • Electricity theft is a perennial problem in the developing countries. • We study the issue using primary data from the residential consumers. • The results show that price hike drives consumers to steal electricity. • Monitoring, employees conduct and electricity bills explain electricity theft. - Abstract: Pakistan faces the perennial issue of electricity theft. The issue deteriorates the financial outlook of utilities and is detrimental to investment in capacity improvement of electricity grid. The solution is generally sought through fiscal injection in capacity enhancement, demand-side management and rationing of electricity. This study investigates the key factors that contributes in electricity theft through structured questionnaires from residential electricity consumers of IESCO in the twin cities of Rawalpindi and Islamabad. A sample size comprise of both rural and urban respondents. The demographic profile and descriptive statistics are discussed. Most of the respondents agree that electricity price hike is the main contributor in rising theft. The crime is taking place with the connivance of bribe accepting utility employees. The correlation analysis is carried out and the data is further used for the empirical estimation of the model. The regression analysis employed key variables such as the conduct of utility employee, consumers' satisfaction with the service, monitoring, overall consumer perception and the monthly expenses on electricity consumption. The results suggest that monitoring, conduct and monthly expenses variables are significant in explaining electricity theft. These finding suggest an increase in transparency and accountability and a decrease in tariffs to reduce pilferage.