The UK government has written to the husband-and-wife team behind the insolvent Prax Lindsey oil refinery in Lincolnshire urging them to “do the decent thing” and support affected workers financially, amid mounting concern that finding a buyer for the plant will be difficult.
In a letter to the Prax Group owners, Arani and Sanjeev Kumar Soosaipillai, seen by the Guardian, the junior energy minister Michael Shanks said the government was “urgently exploring what support can be offered to the workforce at this difficult time”.
He added: “However, we strongly encourage you to do the decent thing and publicly commit to make a voluntary financial contribution to support workers at [Prax Lindsey Oil Refinery].
“This could be through direct financial support to them or funding for retraining schemes to ensure that they can pursue new job opportunities if the refinery cannot be sold.”
More than 100 fuel tanker drivers were told on Monday they had lost their jobs. Further job losses are expected to follow at the affected divisions of Prax Group, which employed 625 people.
The Soosaipillais have taken about £11.5m in pay and dividends out of the company since buying the refinery in 2021, a Guardian analysis suggests. According to a source close to the company, the couple left the UK for Dubai last week as the plant plunged into insolvency.
Several potential buyers expressed tentative interest in the site – one of only five oil refineries left in the UK after the closure of Grangemouth earlier this year – in the immediate aftermath of the debt-laden company’s sudden implosion, according to well-placed sources.
However, Shanks’s letter to the Soosaipillais appeared to cast some doubt on the likelihood that a buyer could be found for the business, which reportedly owed £250m to HM Revenue and Customs when it failed.
“While the official receiver is urgently assessing whether a sale of the refinery is possible, this will be difficult given the state the business has been left in,” Shanks said.
The official receiver, a government employee managing the insolvency, has set a deadline of about two weeks to identify a white knight investor to rescue the plant, Sky News reported on Tuesday.
Last week’s failure of Prax Lindsey prompted anger from ministers in the energy department, who were aware of the company’s parlous financial position but had been assured by the Soosaipillais that its survival was not at stake.
Multiple sources said that Prax Group, which also owns oilfield investments in Shetland and petrol stations, had got into difficulty after amassing huge debts to fund ambitious acquisitions, including the $167m (£123m) purchase of Lindsey from Total in 2021.
The refinery is continuing to operate after the government agreed to buy fuel from Lindsey’s supplier, the global commodities trading house Glencore.
A spokesperson for the Department for Energy Security and Net Zero played down concerns about fuel supplies, after reports that petrol stations in Lincolnshire, close to the refinery, had run out of fuel.
“Deliveries from the Prax Lindsey oil refinery have resumed,” the spokesperson said. “The official receiver is ensuring continued safe operations at the site while options, including a potential sale, are explored. The UK is well supplied with fuel – the site is right next door to one of the biggest and most efficient refineries in the country, and stock levels are normal across the UK.
“Our sympathies are with workers, who have been made redundant by Axis Logistics Ltd, part of the Prax Group. These workers are in high demand and we will work to ensure their onward employment.”
The Guardian has approached a representative of the Soosaipillais for comment.