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Seeking to save Prime Minister Manmohan Singh the political embarrassment, officials have indefinitely postponed the foundation stone laying ceremony of Assam Gas Cracker project land acquisition for which is only half complete.

"The Prime Minister was to lay the foundation stone of the plant promoted by state-run GAIL (India) Ltd on April 7. But the ceremony is off as of now," a government source said.

Only about half of the nearly 1,400 acres of land for the project at Lepetkata in Dibrugarh district of Assam has been acquired and officials are wary of any controversy, particularly in light of recent Nandigram experience.

The West Bengal government was forced to shift a chemical plant from Nandigram following violent protests over land acquisition.

GAIL holds 70 per cent interest in the Brahmaputra Cracker and Polymers, the joint venture company implementing the project. The remaining 30 per cent equity is shared equally among Oil India Ltd, Numaligarh Refinery Ltd and Assam.

The project is to be completed in 60 months from the date of financial closure.

Sources said the Prime Minister may give a new date for the foundation stone laying function once all necessary approvals for land acquisition are in place.

OIL is to supply 6 million standard cubic meters per day of gas from its Duliajan field to the petrochemical complex. Oil and Natural Gas Corp (ONGC) will supply 1.35 mmscmd gas for the plant till March 31, 2012 and 1 mmscnd thereafter.

The plant shall also utilise 160,000 tons per annum of petrochemical grade Naphtha from NRL.

Sources said the petrochemical complex will comprise of a gas separation plant, cracker unit, downstream polymer and integrated off-site/utilities plants. The complex has been configured with a capacity of 220,000 tons per annum of Ethylene and 60,000 tons per annum of propylene with natural gas and naphtha as feed stock.

The products from the petrochemical complex shall be 220,000 tons of HDPE/LLDPE, 60,000 tons of Polypropylene, 55,000 tons of Raw Pyrolysis Gasoline and 12,500 tons of fuel oil every year.

Assam Government has granted exemption from entry tax on capital goods, exemption from works contract tax during construction and sales tax/VAT exemption on feed stock and products for 15 years from the date of commencement of production.

The existing LPG plant from GAIL's Lakwa plant will be modified to process gas for recovery of ethane and higher hydrocarbon fraction, which will be transported to Lepetkata through a pipeline.

The Assam Gas Cracker Project was proposed as a part of the implementation of Assam Accord signed by Government of India on August 15, 1985.

Originally, the project was to be implemented by Reliance Assam Petrochemicals Ltd (RAPL), a joint venture company of Assam Industrial Development Corp and Reliance Industries Ltd. RAPL was granted various concessions by Government of India for implementation of the Gas Cracker Project but the project never took off the ground.

In 2003, GAIL was asked to examine the feasibility of taking up the Assam Gas Cracker Project on its own and the Cabinet in 2006 decided to allow GAIL to implement the project.