Diminishing returns

Nagaland’s power sector is facing a financial problem that can no longer be treated as a routine departmental issue. The State spends roughly 500–600 crore a year purchasing electricity but recovers only about200–250 crore through revenue. This means that nearly 300–350 crore may remain unrecovered every year. Another estimate puts the annual loss at298–368 crore, or around 60 per cent of the purchase cost. The exact figures may vary depending on the accounting method. But the larger picture is undeniable: a substantial portion of the electricity purchased by Nagaland is not being converted into revenue. This is a serious burden for a State already under considerable fiscal pressure. Power losses have persisted for decades. What was once around 30 per cent of the total purchase cost has risen to about 40 per cent in recent years. Meanwhile, electricity demand continues to grow. Peak demand was around 194 MW in 2025 and is projected to reach about 304 MW by 2035. If another 100 MW is required by 2030, meeting that demand through purchased power could cost an additional ₹450 crore. Unless revenue collection and distribution are improved, higher demand could therefore mean higher losses rather than greater economic growth.The reasons are well known. Electricity theft, illegal connections, meter tampering, unmetered supply and weak billing systems contribute significantly to the problem. Illegal tapping is reported in both urban and rural areas. Dimapur, the State’s largest commercial centre and a major consumer of electricity, also faces problems of non-realisation. Old substations, long feeder lines and inadequate transformer capacity add to technical losses. Communitisation has further complicated the situation. Introduced in 2002, the system allows villages to operate through single-point metering, with little or no consumer-level metering. Many consumers are therefore billed on the basis of minimum or average consumption. Whatever the original intention, such a system weakens the direct link between electricity consumed and electricity paid for. It also makes it difficult to identify who is responsible for excessive consumption or unpaid bills. Reform is therefore unavoidable. Smart metering can bring transparency by measuring actual consumption. Under the Revamped Distribution Sector Scheme, Nagaland has a target of installing 3,23,878 meters, covering consumers, distribution transformers and feeders. About 37,081 meters had been installed in early 2026. By August, the figure had increased to 57,625, or only about 18 per cent of the target. The progress is welcome, but the pace is inadequate considering the scale of the problem. Nagaland needs a time-bound strategy. Metering must be accelerated, illegal connections must be dealt with firmly, billing must become more efficient and electricity infrastructure must be upgraded. Communitisation should also be reviewed wherever it prevents transparent consumer-level accounting. The issue is not merely about recovering money. It is about building a power system that can support Nagaland’s economy. Electricity cannot remain financially sustainable when a large part of its purchase cost goes unrecovered. Every unit supplied must be measured; every consumer must be billed and every legitimate bill must be recovered. Until that happens, Nagaland’s growing demand for electricity will continue to deepen, rather than reduce, the financial burden on the State.