State-owned ONGC Tuesday signed an MoU with a Rajasthan-based private company to set up a gas-based fertilizer plant in Tripura to meet the growing shortage of urea in the eastern and northeastern states and adjoining Bangladesh.

The Oil and Natural Gas Corporation (ONGC), in association with Chambal Fertilisers and Chemicals Limited (CFCL) and the Tripura government, will set up the Rs.5,000 crore plant in northern Tripura.

"The Tripura government would share the 10 percent of the equity while the remaining 90 percent would be borned equally by CFCL and ONGC," ONGC CMD Sudhir Vasudeva said.

"We expect by 2016 the fertilizer plant would start producing urea and three million cubic metres of gas would be required per day for the project," Vasudeva said, adding that the plant would annually produce 1.3 million tonnes of fertilizer.

The Tripura government has asked the district magistrates of North Tripura and Dhalai districts to select a suitable 800 to 1,000 acres of land for the fertilizer plant.

CFCL chief finance officer Abhay Baizal said that the proposed fertilizer plant would meet the large demand of fertilizer in eastern and northeastern states and adjoining Bangladesh.

"After meeting the demand of the northeastern states, we would try to supply fertilizer to Odisha, Bihar and West Bengal via Bangladesh," Baizal added.

ONGC had earlier sought expression of interest from companies with relevant experience and track record to be a partner in the proposed gas-based fertilizer plant.

The ONGC has also been setting up a giant gas-based 726 MW capacity power plant at a cost of Rs.1,000 crore at Palatana in southern Tripura to cater to the electricity needs of northeastern states.

Founded by K.K. Birla, CFCL is one of the largest private sector fertilizer producers in India.