Can you tell me the story of how Sai Baba was able to light lamps using water instead of oil?

Certainly. Sai Baba had a great fondness for lighting lamps and would daily beg for oil from local shopkeepers. As recounted in Chapter 5, the shopkeepers grew tired of this and conspired to refuse him. When they all said no, Baba returned to the mosque, took his tin pot which contained a miniscule amount of oil, added water to it, and drank it as an offering to the Supreme. He then filled the lamps with plain water and lit the wicks. To the astonishment of the grocers who were watching, the water-fueled lamps burned brightly throughout the entire night, demonstrating his divine power.