Oil & Natural Gas Corp. (500312.BY) may delay building a petrochemical complex in western India by as much as six months because the global credit crunch has squeezed funding for the INR135 billion ($2.7 billion) project, said a senior executive at ONGC Petro-additions Ltd., ONGC's special purpose vehicle for the project.

"Out of the INR135 billion, we have to raise around INR85 billion," the executive, who declined to be named, said Monday. "This looks difficult in today's market, and we have now delayed issuing our tenders for the project."

The executive didn't elaborate on the fund-raising plan.

Local media previously reported that ONGC was planning an initial public offering of shares of ONGC Petro-additions, or Opal, to raise about INR35 billion by selling up to a 25% stake. In addition, the board of Gail (India) Ltd. (532155.BY) last month approved taking up to 19% stake in Opal, the reports said.

Indian companies in sectors such as automobiles, steel and textiles are cutting production or delaying building new factories or expanding existing units as a worsening global financial crisis chokes demand while also impacting availability of financing.

"We have already spent INR500 million but have been postponing allotting another main tender for the cracker unit worth INR60 billion for over three months now," said the executive.

"The project was expected to be completed by mid-2012, but it appears that it may get delayed by three or six months."

The petrochemical complex at Dahej in the western state of Gujarat will comprise a cracker and downstream polymer plants, said the executive.

Until now, Opal has awarded a contract worth INR8.4 billion to IVRCL Infrastructure & Projects Ltd. (530773.BY).

The executive said two consortiums including Germany's Linde Group, India's engineering and construction firm Larsen & Toubro (500510.BY) and U.S.-based Stone & Webster's are competing for the cracker unit contract.

"In fact, we have already identified the contractors but are not awarding the contracts due to the slowdown," the executive said.

Opal was established by state-run ONGC as a special purpose vehicle in November 2006. ONGC has invested INR9.92 billion in Opal for a 26% stake, while Gujarat State Petroleum Corp. owns a 5% stake.

ONGC is scouting for a strategic investor and financial institutions to sell stakes in the project.

Global companies such as Japan Polypropylene Corp., a joint venture between Chisso Corp. and Mitsubishi Chemical Holdings Corp. (4188.TO), LyondellBasell Industries, one of the world's largest polymer, petrochemical and fuel companies, Ineos Group, Mitsubishi Chemicals and Mitsui & Co. were also reported in local media to be eyeing a stake in the project.

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