The Union Cabinet is understood to have decided to constitute an empowered Group of Ministers to resolve the crisis plaguing the multi-billion Dabhol power project, promoted by the erstwhile Enron Corporation.

The GoM will look into various issues, including providing a central guarantee for financial institutions, to raise loans from the market needed to restart generation at the project, shut down about two years ago due to a tiff between its promoters and the Maharashtra government over payment and rate of electricity.

Sources said the decision to constitute the GoM was taken at the meeting of the Cabinet on Thursday.

While the finance ministry is looking into the entire issue, Finance Minister P Chidambaram has excused himself from the matter on the ground that he had represented GE and Bechtel, who held part equity in the project.

It has been reported that the finance ministry had proposed providing guarantee of over Rs 3,000 crore (Rs 30 billion) to a Special Purpose Vehicle to be floated by the financial institutions to revive the project wherein the SPV would buy out the offshore lenders.