The State Administrative Council (SAC) sanctioned formation of a separate Joint Venture Company, having Government of India (Central PSU) and Government of J&K (J&KSPDC) as the two partners owning defined shares in the company, for development of the 850 MW Ratle Hydro Electric Project (HEP) and its transfer to the J&K within seven years from the start of commercial operation of the project.
The SAC further accorded sanction to the submission of five models of Joint Ventures based on ownership proportion with 15-25% free power (including Local Area Development Fund) to the Ministry of Power, Government of India, for arriving at the best suitable Joint Venture Model. The analysis of the models has revealed that all of these will be favorable to Jammu and Kashmir with majority ownership remaining with state (from 51% to 90% state ownership).
The hydro power projects, with long gestation periods, coupled with relief & rehabilitation issues and higher initial capital investment, have not remained attractive investment portfolios for private investors. Secondly, 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.
In view of the strategic importance of accelerating development of hydro power projects on western rivers as per provisions of the Indus Waters Treaty, the Jammu and Kashmir government proposed development of the project in joint venture mode between Jammu and Kashmir State Power Development Corporation (JKSPDC) and Central PSUs. An earlier Joint Venture was established for PakalDul, Kiru&Kwar HEPs (CVPP ltd).