Indebted Russian carmaker GAZ is to  receive RUB5.6bn (US$180.2m) from the state to build a diesel engine plant, prime minister Vladimir Putin has announced.

GAZ, the industrial partner in Magna International's bid for General Motors' Opel-Vauxhall operations, is among the hardest hit in the Russian auto market, which needs state action to cope with a potential sales decline of 50-60% this year.

Interfax News Agency reported Putin as saying: "The financing will be available for the company in a very short time."

The plant will be located in the Yaroslavl region and will produce 40,000-50,000 engines a year for the GAZ model range and other customers.