Beximco, Indian Oil synergy to grab a good slice of fast-growing LPG pie
At a time when most companies are grappling with the financial fallout of the global coronavirus pandemic, local giant Beximco Group, it appears, is doing alternatively well for itself.
Its subsidiary Beximco LPG has teamed up with the Indian state-owned Indian Oil Corporation to income off Bangladesh's fast-developing liquefied petroleum gas industry and supply the cooking food gas to northeast India.
The LPG industry in Bangladesh has seen a five-fold growth during the past five years and is likely to grow at a compound total annual growth rate of 12-13 %, according to Sanjiv Singh, chairman of Indian Oil.
The brand new venture is a 50-50 partnership between Dubai-based IOC Middle East FZE, a wholly-owned subsidiary of the neighbouring country's major refiner and marketer of petroleum products, and RR Holdings, the parent firm of Beximco.
Just as per the business enterprise plan, the JV might begin working by acquiring Beximco's existing LPG property.
It aims to create a sizable LPG terminal at a good deep-water port in Bangladesh, which would facilitate receipt of LPG in large gas carriers, resulting in a reduction found in the cost of imports, Singh said.
"Reduction in price of import would help to make LPG available at a realistic price to the persons of Bangladesh," he explained, adding that the JV will pull strength from the primary competencies of Indian Oil and the neighborhood expertise of Beximco.
As Bangladesh's middle-school is increasingly having higher purchasing vitality, the LPG sector has seen an exponential boom over time and is set to grow further in the returning years, said Nasrul Hamid, state minister for electricity, energy and mineral sources of Bangladesh.
A partnership and investment as of this scale between two experienced and main players have every potential to be a accurate game-changer in the market, he added.
At the same time when the entire globe is grappling with the severe economic consequences as a result of the coronavirus pandemic, this investment reflects the resilient and enduring friendship between Bangladesh and India, explained Salman Fazlur Rahman, private industry and investment adviser to the prime minister of Bangladesh and vice-chairman of Beximco Group.
The JV will be a catalyst for socio-economic change in Bangladesh through greater penetration of affordable LPG in the united states, said Dharmendra Pradhan, petroleum & gas and steel minister of India, in the news release.
The agreement is a significant milestone in the annals of India-Bangladesh cooperation, he said, while presiding over the signing ceremony yesterday.
"We believe our blended strengths allows us to be on the leading edge of the innovation curve which will enable us to be the largest downstream coal and oil organization in Bangladesh," said Ahmed Shayan Fazlur Rahman, chairman of RR Holdings.
The JVC aspires to be the virtually all trusted, admired and premiere LPG company in Bangladesh offering the safest, smartest and most convenient LPG solutions with best-in-class customer support, he said.
The JVC also intends to diversify into other downstream coal and oil businesses like lube blending plants, liquified gas, petrochemicals, LPG export to northeast India through pipeline between your two countries, renewable energy, the chairman of RR Holdings added.
IOC is already sourcing the cooking gas from Bangladesh to save lots of the expense of transportation completely from Haldia Port found in West Bengal, according to a written report in the Hindu Organization Line in March.
Indian Oil is normally importing bulk LPG from privately-possessed Omera Petroleum and Beximco Petroleum, covering a distance of barely 250 km. That is a fraction of the 1640 km road range from Haldia to Agartala via-Siliguri Corridor.
While lower transportation cost brought savings to IOC, the business exploring means to reduce the costs, the article said.
There are about 20 importers and bottlers of LPG in Bangladesh and their combined development capacity is practically 20 lakh tonnes against a demand of only nine lakh tonnes.
As their capacity is hugely underutilised, exports to India can help them become commercially viable.
