ONGC, the second largest power generation group after NTPC in the country, would set up the Rs 3500 crore (Rs 35 billion) project for maximum utilisation of gas available in the state, Raha said.

Currently, only one third gas production potential of the state was being utilised while the rest was lying untapped due to "lack of interest on the part of public and private sector companies which were given gas allocation rights to set up facilities," Raha said.

"Seeing the lack of interest on the part of the companies, the ministry of petroleum and gas cancelled all allocations and advised the ONGC to take steps to realise 100 per cent gas potential in Tripura", he said.

An ONGC delegation led by Raha met Chief Minister Manik Sarkar who assured them of all help and cooperation for identification of land, provision of utilities and execution of the project.

Raha said initially it had been decided to set up the power project at Palatana in South Tripura district. The project was expected to generate increased revenue, three times the current level, for the state government in the form of royalties and sales tax.

ONGC, Raha said, has decided to invest another Rs 400 crore (Rs 4 billion) to drill additional production wells, construct three new gas-collecting stations along with updating two existing stations as also to lay pipeline network to transport gas from the wells to the power plant.

The ministry of petroleum has directed ONGC to execute gas production and transmission network directly and has also proposed to take up construction of high voltage connection grid, which will be finally connecting the national grid through a parallel project. Raha said national gas production would increase by 2.5 per cent after the project is commissioned.