Ministers are exploring ways to hand state support to Britain’s remaining oil refineries as they scramble to deal with the fallout from the collapse of the Prax Lindsey site in Lincolnshire which has cast a shadow over hundreds of jobs.
Sky News understands that Ed Miliband, the energy security secretary, wants to devise a mechanism for refineries to become eligible for the Energy-Intensive Industries Compensation Scheme – from which they are currently excluded.
Energy costs were at the heart of the government’s industrial strategy launched last week.
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Such a move would hand a welcome financial boost to the sector by assisting them with energy costs amid a slew of challenges which culminated in the appointment of compulsory liquidators over the Prax Lindsey refinery on Monday.
The site’s insolvency – revealed by Sky News – has drawn strong criticism from the government, with energy minister Michael Shanks calling the development “deeply concerning”.
“There have been longstanding issues with this company and workers have been badly let down,” he said.
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“The secretary of state is today writing to the Insolvency Service to demand an immediate investigation into the conduct of the directors, and the circumstances surrounding this insolvency.
“The government will ensure supplies are maintained, protect our energy security, and do everything we can to support workers and the local community, including engaging with trade unions and industry bodies.
“The company has left the government with very little time to act.”
Prax Group is owned by Sanjeev Kumar Soosaipillai, who also acts as its chairman and chief executive and is the sole director of the refining subsidiary.
The crisis at the Lindsey refinery, which is located on a 500-acre site five miles from the Humber Estuary, echoes that at Britain’s dwindling number of oil refineries.
According to the company, the site has an annual production capacity of 5.4 million tonnes, processing more than 20 different types of crude including petrol, diesel, bitumen, fuel oil and aviation fuels.
The refinery, which was bought from France’s Total in 2020, is understood to have become a growing drain on cash across the wider Prax Group, with which it has cross-guarantees.
About 180 people work at State Oil Ltd, Prax Group’s parent entity, while roughly 440 more are employed at the Prax Lindsey Refinery.
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The rest of the group, which includes oilfield assets in the Shetland Islands and hundreds of UK petrol stations, employs hundreds more people.
The other assets are not in administration themselves but are expected to be sold as part of the reorganisation of the group.
