Srinagar, Sep 5 (PTI) Jammu and Kashmir State Administrative Council (SAC) Wednesday approved formation of a joint venture between the Centre and the state government for development of the 850 MW Ratle Hydro Electric Project (HEP).

HEP will be transferred to the state within a period of seven years from the start of commercial operation of the project.

The sanction was accorded in a meeting of the SAC chaired by Governor Satya Pal Malik here.

The hydro power projects, with long gestation periods, coupled with relief and rehabilitation issues and higher initial capital investment, have not remained attractive investment portfolios for private investors, an official spokesman said.

"The last attempt at promoting it as a PPP project with a 35-year concession period failed. The Joint Venture is the best route now to realise the potential of the Ratle HEP," the spokesman said.

Most of the major civil construction agencies in the country are presently facing financial stress and tend to avoid such investments.

To minimize risk in investments, construction agencies feel more comfortable to work as contractors and not owners in development of hydro power, he said.

The SAC also accorded sanction to the submission of five models of the joint ventures based on ownership proportion with 15-25 per cent free power (including Local Area Development Fund) to the Ministry of Power, Government of India for the purpose of arriving at the best suitable Joint Venture Model, the spokesman said.

The analysis of the models has revealed that all of these will be favorable to Jammu and Kashmir, with majority ownership remaining with State, ranging from 51 per cent to 90 per cent.

(This is an unedited and auto-generated story from Syndicated News feed, LatestLY Staff may not have modified or edited the content body)