The project, conceived in 2000, became controversial because of allegations of corruption.
Former Deputy Chief Minister Ajit Pawar and MLC (then with NCP) Sandip Bajoria are named in a petition before Nagpur bench of Bombay High Court which alleges misappropriation of funds in the project.
In a recent election, Bajoria was elected as an Independent member of the state Legislative Council.
The dam will have total water storage capacity of around 25 TMC and is estimated to cost about Rs 500 crore.
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Since the project is "site specific", it was necessary to hand over the forest land, the GR said.
"The total area that will be submerged is 12,000 hectares. There are 32 villages which will be rehabilitated completely while another 15 villages will be rehabilitated partially. The dam is expected to irrigate around one lakh hectares in Buldhana and Akola districts," the dam's executive engineer, Hemant Solge, said.
"The actual cost would be around Rs 500-600 crore but major expenditure would be on land acquisition and rehabilitation. There are some lift irrigation schemes proposed as well, so we need to create infrastructure for the same," he said.