Preheat oven to 350°F.
In a large skillet, cook bacon in a large cast iron skillet (or other oven-proof skillet) over medium heat until crisp, about 7-8 minutes. Use a slotted spoon to remove bacon to a paper towel-lined plate, reserving the drippings in the pan.
Melt butter in the same skillet over medium-high heat. Add onion and cook, stirring, until the onion softens, 3 to 4 minutes. Add the garlic and cook, stirring constantly, until fragrant, about 30 seconds. Stir in the tomato paste, kosher salt, sugar and pepper. Cook for 1 more minute.
Add the bacon, water, and rice. Bring to a simmer, then reduce the heat to low. Cook, uncovered, stirring occasionally, until the liquid has reduced slightly, about 7-9 minutes. Use a wooden spoon to scrape up any browned bits from the bottom of the skillet as you stir.
If you're not using an oven-proof skillet, transfer the mixture to a greased 2-quart baking dish. Cover the skillet (or baking dish) and bake until the rice is tender, about 30-40 minutes, stirring every 15 minutes.
Fluff the rice, garnish with fresh parsley, and serve.