"The Dabhol plant will start generating about 2,000 mw within a year as the whole thing has been amicably settled among all the stakeholders," Deshmukh said.
A comprise has already been "arrived at with GE, who along with Bechtel controlled 85 per cent in the Dabhol Power Company," he said, adding a new company would now operate the gas-based power plant in Ratnagiri, Maharashtra.
Deshmukh's assertion came a day after Union Law Minister H R Bhardwaj said that "all cases" relating to the Dabhol project have been settled by the government.
Maharashtra State Electricity Board has agreed to buy all the power generated from the plant at Rs 2.30 per unit.
The state witnessed public outrage last month over acute power crisis and protests by opposition Shiv Sena. The generation from the plant could help bridge the over 4000 MW deficit but would clearly be unable to meet the whole demand.
The plant would be run by Ratnagiri Gas and Power Pvt Ltd, a special purpose vehicle floated by National Thermal Power Corp, GAIL, Indian financial institutions and Maharashtra state electricity board.
Besides GE and Bechtel, the government has also reached agreements with overseas lenders and US government-promoted Overseas Private Investment Corp.
The government has also asked NTPC, GAIL, lenders and MSEB to finalise the shareholders agreement as well as the power purchase agreement within a week.