Oil and Natural Gas Corporation (ONGC [Get Quote]), the country's largest exploration and production company, as also the most profitable one, is making a significant move up the value chain by expanding its presence in the power sector.

The company plans to add about 2,700 Mw of gas-based generation capacity, for both captive and commercial use, through three plants. This capacity will be larger than the 2,300 Mw capacity owned by Tata Power [Get Quote] � the country's largest private power player.

The biggest of these plants will be a 1,000 Mw gas-based power plant at ONGC's special economic zone at Dahej in Gujarat. The plant will partly supply its petrochemical complex and its methane-propane extraction plant in the zone.

Another captive power plant at Mangalore will supply power to ONGC's upcoming petrochemical complex in the area.

The company is already implementing a 750 Mw gas-based power plant in Tripura with the state government, which is entirely for commercial use. The Tripura plant is expected to be ready in a year.

"The petrochemical complexes at Dahej and Mangalore and the methane and propane extraction plant at Dahej will need a lot of power. We are buying large quantities of electricity for our operations in Gujarat. A power plant will be necessary there and in Mangalore," said a senior ONGC official requesting anonymity.

ONGC Chairman and Managing Director RS Sharma recently said that the company had also started work on a 50 Mw wind power pilot project in Gujarat as it was spending a lot of money buying power in the state.

The exploration company is investing Rs 13,000 crore in setting up a petrochemical complex and a methane-propane extraction plant at Dahej. They are being jointly developed by ONGC and Gujarat Industrial Development Corporation.

The power plant is likely to have an initial capacity of around 500 Mw, which will later be increased to around 1,000 Mw, the ONGC official said. He did not disclose the investment likely to be made in the power plant.

Typically, a gas-based power plant costs about Rs 3.5 crore per Mw.

"We will need 225-250 Mw of power for our captive use. However, as joint developers of the SEZ, we have to develop the area in terms of power, water supply and roads, among other things," ONGC's Director (HR and business development) AK Balyan said.

He added that the captive power plant in Mangalore would replicate the Dahej model. Company officials said the Mangalore power plant was also likely to have a capacity of around 1,000 Mw.