Britain’s second-largest oil refinery is locked in negotiations with tax authorities over a deferred tax bill amid reports that it may be on the verge of collapse.
Essar Energy, which owns the Stanlow oil refinery in Ellesmere Port, Cheshire, is negotiating with HM Revenue and Customs (HMRC) for a VAT payment of £ 223 million, delayed due to the pandemic.
Stanlow Oil Refinery supplies about a sixth of Britain’s road fuel and is owned by billionaire brothers Shashi and Ravi Ruia through their company Essar Oil UK.
Essar Oil The United Kingdom (EOUK) used last year’s government pandemic VAT deferral scheme, which allowed companies to delay tax payments. It still owes £ 223 million, and was supposed to start repayments this week.
Essar says it is in positive discussions with HMRC for a brief extension of its “time-to-pay (TTP) arrangement” agreed earlier this year, after repaying £ 547m. of the originally deferred £ 770 million.
“All companies covered by TTP have been allowed to meet their obligations until January 2022. The EOUK had accepted an accelerated schedule to make this payment. However, the recovery from the pandemic has been slower than anticipated, “the company said, adding that it hopes for a solution soon.
Essar Oil UK, which is being advised by EY, also insists it has made “significant progress” in strengthening its financial position and agreeing on new funding.
“As a result of that work over the last few months, the EOUK has 1.1 billion [£800m] secured liquidity. Moreover, the company has now returned to Ebitda positive [earnings before interest, taxes, depreciation, and amortisation] and is therefore in a much stronger position to meet the continuing challenge that the pandemic presents, ”it says.
But it reported the Sunday Times that the government was on guard if Stanlow collapsed and that it could go bankrupt if it could not raise more funds. It happened and the refinery would probably be taken over by the official recipient to keep the refinery running.
Essar Oil UK said Stanlow was operating normally during the current fuel crisis, supplying fuel to north-west filling stations as usual, as panic attacks hit forecourts across the country.
Since the beginning of August, the company has increased its daily shifts from 52 to more than 70 and aims to increase deliveries to more than 80 by the end of October, it says.
Disclaimers for mcutimes.com
All the information on this website - https://mcutimes.com - is published in good faith and for general information purpose only. mcutimes.com does not make any warranties about the completeness, reliability, and accuracy of this information. Any action you take upon the information you find on this website (mcutimes.com), is strictly at your own risk. mcutimes.com will not be liable for any losses and/or damages in connection with the use of our website.