The decision to this effect was taken at the meeting between the officials of NTPC and GAIL, the new promoters of the company, and the representatives of the state government led by state energy minister Dileep Walse-Patil on Wednesday.

This is the second such decision taken by the government to doll out mega bucks for power, as state is in desperate situation and grappling with power shortage of around 5,700 MW.

Earlier this week, state cabinet cleared proposal to give around Rs 1300 crore (Rs 13 billion) led power utility MSEDCL to buy expensive power during summer months.

The government has agreed to give Rs 45 crore (Rs 450 million) immediately to RGPPL to ensure turbine of 330 Mw unit of block II of Dabhol is carried out by the end of March and block II starts generating power at its full capacity of 740 Mw.

The remaining amount will be raised by the government from financial institutes and given to RGPPL to ensure repair and maintenance work of other two block is completed by November.

The plant lay idle after Enron, the promoter of Dabhol, went bust in 2001. During this period, the plant machinery got extensively damaged due to neglect, corrosion and theft.

Speaking with Business Standard, a senior official of the state energy ministry said, as already Rs 10,000 crore (Rs 100 billion) have been pumped by NTPC, GAIL and various financial institutions to revive the project, they are no longer willing to lend further to the project.

Moreover, financial institutes won't lend money to the project unless power purchase agreement and contract for gas is in place, he added. "But as early revival of this project is in the interest of state, we decided to extend helping hand to the project," he said.