- Friday, April 19, 2024
By: Jaimin Solanki
INDIAN billionaire brothers Shashi and Ravi Ruia have extracted $717 million (£518 million) dividends from an ailing refinery in the UK since 2017.
Their Essar empire controls Stanlow oil refinery in Ellesmere Port that accounts for a sixth of Britain’s fuel supplies, reported The Sunday Times.
Stanlow is now fighting for its future after Covid crunched finances, the report added. It is one of only six oil refineries in Britain turning crude oil into diesel, petrol and jet fuel.
Essar Oil UK’s main business is Stanlow, which it bought from Shell for £801 million in 2011. There are about 70 Essar-branded petrol stations, not owned by the company.
According to reports, the government’s contingency plans for the refinery’s collapse involve mobilising troops to help transport fuel around the country under a ministry of defence plan known as ‘Operation Escalin’.
The revelations over dividends are shown in Companies House accounts, as Essar Oil UK is locked in talks with officials at HM Revenue & Customs, seeking to buy more time to pay £356 million it owes in VAT, The Times report revealed.
Essar Oil UK has insisted it will emerge from the crisis, but officials fear there is a genuine risk of insolvency.
The firm took advantage of the government’s VAT deferral scheme, introduced last year to ease pressure on companies during the pandemic.
Its main lender, Lloyds Banking Group, has walked away, raising concerns about the company’s future. Now, the group is hunting for financing after Lloyds’s exit.
Essar Oil UK is not seeking a bailout and has insisted it is not a highly indebted business.
“The next time this business knocks on the door of government looking for help ministers shouldn’t answer until any money taken out of the business is returned,” Sir Ed Davey, Liberal Democrats leader and former energy secretary, told The Times.
Lloyds is believed to have been frustrated by delays to accounts and concerned by resignations from advisers, as well as the departure of two chief executives in a short space of time.
The bank’s receivables securitisation facility enabled Essar Oil UK to be paid immediately for sales instead of waiting for customers to pay, the report added.
Meanwhile, Essar Oil UK stated that it had already replaced more than half of the Lloyds facility and was ‘confident that replacement arrangements for all the facility will be secured in the near term’.
Shashi and Ravi Ruia founded Essar in 1969. It has annual sales of $14 billion. Shashi’s son, Prashant, chairs Essar Oil UK. Essar Oil UK declined to comment on the dividends, but a source said it had invested $1 billion in Stanlow since taking control.
