Oil refinery collapsed ‘owing taxman £250m'
The failure of Prax Group, which owned the Lindsey Oil Refinery, threatens the taxpayer with a bill of up to £250m, sources said.
Lindsey collapsed earlier this week, blind-siding Ed Miliband, the Energy Secretary, by declaring insolvency. Officials have been forced to step in to secure the operations of the plant, which supplies 10pc of Britain's fuel.
It is understood that Prax was battling severe cash flow problems for more than a year, which left bosses scrambling to extend repayment terms with the tax authority.
The company went as far as lobbying for government support last year, according to a source, who said: 'They were trying to get a more generous payment agreement and stretch the time that they had.'
However, ministers in the former Tory government refused to intervene.
Another source close to the situation said: 'HMRC want their money.'
Mr Miliband has ordered an urgent investigation into the 'conduct of directors and the circumstances surrounding its insolvency' following the collapse of Prax, which has owned the Lindsey refinery since 2021.
Michael Shanks, the energy minister, said last week that 'there have been longstanding issues with the company', which has racked up tens of millions of pounds of losses in the last four years.
Martin Vickers, a Tory MP whose constituency hosts the Lindsey refinery, said: 'I have had concerns surrounding the Prax refinery, particularly in view of the public information about their financial position.'
Questions over owners
The latest revelations will also raise further questions about the company's owners, Sanjeev and Arani Soosaipillai.
The Telegraph revealed earlier this week that they were paid a £3.7m dividend the year before the company's collapse, despite Prax posting $30m worth of losses.
Mr Soosaipillai, who is chief executive and chairman of the business, has not commented since the collapse and did not respond to The Telegraph's requests for comment.
The Insolvency Service has since taken control of the refinery in Lincolnshire. Concerns over potential disruption to fuel supplies have grown in recent days after deliveries of crude were halted.
However, a breakthrough between the Government and Glencore, which supplies the crude, was struck on Friday morning to ensure the plant can keep functioning and fuel can continue to leave the plant.
A spokesman for Teneo, which has been appointed as joint administrators, said: 'As is standard practice in all insolvency cases, the joint administrators will be reviewing the circumstances giving rise to their appointment and the cause of failure.'
An HMRC spokesman said: 'We are unable to comment on identifiable individuals or businesses due to strict confidentiality rules.'
As well as owning the refinery, Prax's $10bn energy empire also includes petrol stations and oil storage sites.
The company had been in talks with the Government since April, but repeatedly refused to share details about its financial situation.
Mr Soosaipillai also assured officials there was no immediate threat to the refinery, a position that suddenly changed last week as his company rushed to declare insolvency.
More than 400 people work at the facility. Mr Shanks told the Commons earlier this week: 'The wealthy owner cannot wash his hands of his obligations to the workers and their families.'
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