"We have got an enviable price for the stakes," a top Gridco official told The Financial Express. He said given the present market condition and the financial position of the distribution companies, a premium was least expected.

He said the 13 lakh consumer-strong power distribution business in the state incurs a loss of about Rs 350-crore per annum. The private partners will not only share the loss with Gridco but also bear the loan burden of Rs 1,100 crore which includes the $350 million World Bank loan, he added.

Speeding up the power sector reform in the state, Gridco last weekrecommended the state government to offload 51 per cent stakes of Wesco, Southco and Nesco in favour of BSES Ltd, and of Cesco in favour of the TEC-Viridian Group (UK).

While the Mumbai-based distribution concern has offered Rs 117 crore -- the highest so far -- for the three subsidiaries, the TEC-Viridian Group has offered Rs 41 crore for Cesco. Notwithstanding the bid condition that not more than two zones will be offered to any company, Gridco has asked the state government to relax the norms in the case of BSES Ltd.

Earlier Gridco had found it difficult to get a private partner for Cesco whose escrow account with Orissa Power Generation Corporation (OPGC) scared away many potential bidders. Later, Gridco was able to manage two offers from BSES Ltd and the TEC-Viridian Group after it allowed the bidders to quote with conditions.

However, Gridco was finally able to convince the TEC-Viridian Group -- the highest bidder -- to withdraw its conditions.

The private partners are likely to take over themanagements of the distribution companies from April 1, 1999. According to the disinvestment conditions, the private partners can appoint managing directors and Gridco chairmen in the subsidiaries.

However, both the partners will have five directors each on the boards. Gridco will transfer 10 per cent of the stakes to its 30,000 employees by the end of the fiscal thus keeping 39 per cent stakes in the distribution companies.