Ed Miliband is racing to unlock emergency state support for Britain’s oil refineries after the Prax Lindsey site crashed into liquidation this morning – leaving hundreds of workers facing an uncertain future.
The energy security secretary wants to bring refineries into a key government compensation scheme that currently excludes them, as ministers scramble to contain the fallout from what one insider called “a complete shambles.”
“The company has left the government with very little time to act,” fumed energy minister Michael Shanks, who revealed the site had hemorrhaged a staggering £75 million since 2021.
Directors Face Probe Over “Deeply Concerning” Collapse
Shanks didn’t mince words about the debacle. There have been longstanding issues with this company and workers have been badly let down,” he said, announcing that Miliband was demanding an immediate investigation into company directors.
The Official Receiver slapped winding-up orders on three Prax companies today – Prax Lindsey Oil Refinery Limited, Prax Storage Lindsey Limited, and Prax Terminals Killingholme Limited. FTI Consulting has been parachuted in as special managers to help sort out the mess.
But that’s just the tip of the iceberg. Administrators Teneo have also been called in for State Oil Ltd – Prax Group’s parent company – putting up to 2,500 jobs at risk across the entire empire.
Workers Left in Limbo
Unite union boss Sharon Graham pulled no punches: “The Lindsey oil refinery is strategically important, and the government must intervene immediately to protect workers and fuel supplies.”
Around 440 people work directly at the Lincolnshire refinery, with another 180 employed by State Oil. But the tentacles of this crisis spread far wider – Prax owns roughly 200 petrol stations across Britain and has oilfield interests in the Shetlands.
The refinery itself is massive – sprawling across 500 acres near the Humber Estuary, it can pump out 5.4 million tonnes of fuel annually, from petrol and diesel to aviation fuel.
Red Flags Ignored for Years
What’s particularly galling for ministers is that warning signs have been flashing for years. The government says Prax “repeatedly failed” to explain its mounting losses after buying the site from France’s Total in 2020.
Shanks revealed the company had racked up those eye-watering £75 million losses between the takeover and February 2024. When pressed for answers by officials, Prax executives apparently couldn’t – or wouldn’t – provide satisfactory explanations.
Now Miliband wants to extend the Energy-Intensive Industries Compensation Scheme to refineries, throwing them a lifeline on energy costs. It’s a move that would have been welcome years ago – but for Lindsey’s workers, it may be too little, too late.
Britain’s Refining Crisis Deepens
The Lindsey collapse is another body blow to Britain’s shrinking refining sector. It comes hot on the heels of Ineos announcing it would stop crude oil refining at Scotland’s Grangemouth site.
If Lindsey goes under permanently, Britain will be left with just four operational refineries – making the country increasingly dependent on imported fuel at a time of global price volatility.
Prax Group is controlled by Sanjeev Kumar Soosaipillai, who serves as chairman, CEO and sole director of the refining subsidiary. Questions are already being asked about how one man was allowed to preside over such a spectacular failure.
For now, workers face an anxious wait. The government insists fuel supplies won’t be affected, but for the 620 people whose livelihoods hang in the balance, that’s cold comfort.
As one union official put it: “These aren’t just numbers on a spreadsheet – these are real families wondering how they’ll pay their mortgages next month.
Image credit:
Ed Miliband at The World Transformed 2018. Photo by Rwendland, via Wikimedia Commons, licensed under CC BY-SA 4.0.
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