NEW DELHI: State-owned Indian Oil Corp (IOC) on Tuesday said it has set up a joint venture with Bangladesh’s RR Holdings Ltd for LPG business in the neighbouring country.

“IOC Middle East FZE, Dubai, a wholly-owned subsidiary of IOC, and RR Holdings Ltd, Ras Al Khaimah, UAE, the holding company of Beximco LPG of Bangladesh, signed an agreement for the formation of a 50:50 joint venture company (JVC) for LPG business in Bangladesh,” the company said in a statement.

IOC Chairman Sanjiv Singh said the company, which started with lubricant marketing in Bangladesh in 1999, is now joining hands with a formidable partner.

“LPG market in Bangladesh has seen a five-fold growth in the past five years and is expected to grow at a CAGR of 12-13 per cent,” he said.

The joint venture company will import LPG for sale in the local market.

As per the business plan, the joint venture would begin functioning by acquiring Beximco’s existing LPG assets.

“We intend to set up a large LPG terminal at a deep-water port in Bangladesh, which would facilitate receipt of LPG in Very Large Gas Carriers, leading to a reduction in the cost of import. Reduction in cost of import would help make LPG available at an affordable price to the people of Bangladesh,” he said.

Oil Minister Dharmendra Pradhan, who presided over the function, said the agreement is a major milestone in the annals of India-Bangladesh cooperation when a group company of IOC based in Dubai is joining hands with one of the most promising LPG companies in Bangladesh through its holding company in the UAE.

He expressed confidence that similar to the success of LPG penetration in rural India, the new joint venture will be the catalyst of socio-economic change in Bangladesh through greater penetration of affordable LPG in the country.

Salman Fazlur Rahman MP, Private Industry and Investment Adviser to the Prime Minister of Bangladesh said: “The joint venture company should serve as a testament to the remarkable investment potential of Bangladesh.

” “At a time when the entire world is grappling with the severe economic consequences of the COVID-19 pandemic, this investment also reflects the resilient and enduring friendship between Bangladesh and India,” he said.

The joint venture company aspires to become the most trusted, admired, and premiere LPG company in Bangladesh offering the safest, smartest, and most convenient LPG solutions with best-in-class customer service, the statement said.

It also intends to diversify into other downstream oil and gas businesses such as lube blending plant, LNG, petrochemicals, LPG export to Northeast India through pipeline between the two nations and renewable energy.