Can you tell me the story about how Sai Baba lit lamps using water instead of oil?

Certainly. The story of the lamps is a well-known miracle. As described in Chapter 5, Sai Baba had a great love for lighting lamps for the festival of lights and would collect oil from local shopkeepers. One day, the grocers conspired to refuse him oil, calling his daily requests a nuisance. After they all said no, Baba returned to the mosque, took his tin pot which had a tiny bit of oil, added water to it, and drank it as an offering. He then filled the lamps with plain water and lit the wicks. To the amazement of the grocers, the lamps burned brightly all night long, causing them to repent their actions.