The much-awaited decision was announced by Chief Minister Prithviraj Chavan after he visited the project site.
Chavan, who became the first CM to visit the stalled project, which is in its 25th year of construction, said the Rs 1,200 crore package will be separate from other financial provisions related to the mega scheme.
"We would soon go to the State Cabinet for its approval and there should be no problem in getting the nod," he told a press conference here.
The inter-district venture, which has been approved as a national project by the Centre, is coming up across river Wainganga at Paoni, about 45 km from Bhandara. It was launched by then Prime Minister Rajiv Gandhi in mid-1980s.
It has a potential to irrigate 2.5 lakh hectares of agriculture land in three districts - Nagpur, Bhandara and Chandrapur - when fully operational.
The revised cost of the project during 2005-06 was Rs 5,659.09 crore, which was further revised to Rs 7,777.82 during 2007-08. A sum of Rs 3,291.53 crore has been spent on the project till March 2009.
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