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Illegal Use of Electricity in Turkey - Halil Öztürk

We will make electricity so cheap that only the rich will burn candles.

-Thomas Edison

The first public electricity was furnished in London in 1881, after which electricity use has made our lives more comfortable and gone up and up. Although, as usual, there is an electricity market based upon the supply and demand concept, unlike many other products in the world we consume daily, there is a term "electricity theft" in this market. For definition and clarity, electricity theft can be in the form of fraud, stealing, billing irregularities, and unpaid bills. To demonstrate and highlight the size of the issue, according to the news by Northeast Group, across 138 countries, electricity theft and non-technical losses cost utilities $101.2 billion per in lost revenue, and theft is increasing in most regions of the world, still. In this paper, I show how well Turkey is in this issue simply and fundamentally by introducing data and conducting a correlation analysis. In doing so, I use the electricity theft rates shared by T.C. EPDK (Republic of Turkey Energy Market Regulatory Authority) and GDP per capita data by TÜİK (Turkish Statistical Institute) will be benefited from.

Turkey is classified as an upper-middle-income country by World Bank and has successfully electrified all of its population. Additionally, Turkey is considered a newly industrialized country, meaning a transition from being primarily based in agricultural economic activities to being primarily based in goods-producing industries. However, despite such successes about the “strategic” product, electricity, within the first 100 years of the Republic, electricity theft in Turkey has been a hot debate.

Initially, an observation, taking the popularity of Wikipedia as a source of information around the world into account, in the related page of Wikipedia, Electricity Theft, there are just five countries mentioned: Pakistan, India, Russia, Brazil, and Turkey, which may help us say that electricity theft is a problem in Turkey.

In Turkey, 21 major electricity suppliers share the market by cities, and some have nearly as ten times a large theft ratio as some others do. When we look at the cities, the firms are responsible for, and we see that South-eastern Anatolia Region is of the highest ratio, as Marmara is of the lowest one. The sum of the top 10 companies (56.89) is nearly equal to the ratio of the highest one, DİCLE (54.94), for 2018. Also, interestingly, from 2018 to 2019, as there are declines in the top 5 highest-ratio-ones, there are some increases in electricity theft for the lowest ratio ones.

To assess, I conducted a basic correlation analysis between production per capita and the rate of electricity theft. We can see there is an inverse correlation between them (-0.505 for 2018, -0.497 for 2019). For correlation, because the supplies of some cities are shared by more than one firm, I naively used their average and for the calculation of production per capita, since by definition production means income, I used the average GDP per capita of the cities where the companies operate.

Figure 1: Illegal Use of Electricity Share in Turkey by Regions

Although “correlation does not mean causation," there is literature about causation. Hence, if we accept the following statement that there is causation in the correlation between production per capita and electricity theft, we can claim that policies that encourage less electricity theft will lead to a growth in production. To give an example, based upon Solow's Growth Model, policies about human and physical capital and so forth may provide such an increase and eventually lower the theft rates for the regions in which the rates are by far higher than others.

Overall, the Republic of Turkey will celebrate her 100th anniversary in the year to come, and also her industrialization and development will be celebrated. Nonetheless, there is still room to claim that Turkey has not yet addressed her electricity theft successfully. In this paper, I tried to show the electricity theft problem of Turkey by a simple data analysis and observation, and then make simple policy advice with the help of a correlation between GDP per capita and electricity theft rates.


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