City Group founder Fazlur Rahman's final move secures Bengal LPG

City Group founder Fazlur Rahman sealed his final major business deal by acquiring Bengal Group's liquefied petroleum gas (LPG) unit, Bengal LPG, for approximately Tk350 crore.

The finalisation of the acquisition was done on 19 October 2023. City Group founder Fazlur Rahman passed away on 25 December.

At present, there are 40 sister concerns in the group.

As a leading conglomerate in Bangladesh, City Group is set to significantly impact the country's LPG market with an investment exceeding Tk2,000 crore.

The strategic acquisition of Bengal LPG plant in Mongla, boasting a storage capacity of 5,000 tonnes, has bolstered City Group's overall storage capability to 21,500 tonnes.

Also, the group already possesses the Hoshendi plant, featuring a storage capacity of 9,000 tonnes. An additional 7,500 tonnes of capacity is distributed across three ships, according to Imran Uddin, director (Planning and Business Development) at City Group of Industries.

Firoz Ahmed, a director at City LPG, told TBS that City Group plans to launch its flagship brand "TEER" in March and intends to appoint distributors nationwide during this time. This expansion strategy is aimed at solidifying the conglomerate's presence in the LPG market.

Before the acquisition, Bengal LPG had been operating with around 100 distributors in various districts, including Khulna, Barishal, Dhaka, Rangpur and Rajshahi. With the addition of Bengal LPG's distribution network, City Group is well-positioned to meet customer needs in these areas, he added.

Firoz Ahmed expressed the group's ambition to lead in all segments, encompassing household, industrial, automobile and power generation sectors.

He mentioned the group's ongoing efforts to secure permission to enter the automobile sector, a move that would further expand its market reach.

"We are in discussions with a substantial number of industries interested in utilising City's LPG," asserted Firoz.

The Business Standard reporter visited Bengal Group's office for comments on the reasons behind the sale of their LPG plant, but officials declined to make any.

LPG usage in Bangladesh

LPG is a versatile fuel used in various industrial applications, including heating, drying, and captive power generation. Its adaptability to different processes makes it a convenient choice for a wide range of industries across the world.

These factors collectively contribute to the growth of LPG as an industrial fuel in Bangladesh, operators said.

According to the LPG Operators Association of Bangladesh (LOAB), the share of LPG was 4% of the total primary energy used in the country in FY22, while it was only 1% in FY18.

Quoting an estimate from the Japan International Cooperation Agency (Jica), LOAB said LPG demand is projected to increase to 60 lakh tonnes per year by 2032, due to the government's policy to introduce LPG to all new and existing households as an alternative to natural gas.

Nine out of the country's total 27 LPG operators currently cater to more than 80% of total LPG demand in the country, according to the LOAB.

City Group's foray into the LPG market will make it the latest entrant, along with big players, including Omera, Bashundhara, Beximco, Navana, BM and Orion, which have pumped Tk30,000 crore into the country's LPG sector thus far.

According to the LOAB, the country's annual LPG consumption has reached 18 lakh tonnes, with industries accounting for over 13% of this total – a significant surge from less than 2% just five years ago.

In 2022, the Netherlands' SHV Energy entered the burgeoning Bangladesh LPG market through the acquisition of Petromax LPG and Petromax Cylinders at a cost of around $100 million.