Prax Group’s sudden demise surprised some, but others saw ‘a house of cards’ built on a thirst for debt-fuelled growth. It was mid-April and the government had just finished nationalising British Steel, to prevent thousands of job losses at the Scunthorpe steelworks, when word reached Whitehall that another national infrastructure asset was wobbling. Prax Group, owner of the Lindsey oil refinery on the Humber estuary in northern England, was rumoured to be in financial trouble, stoking fears about jobs and disruption to critical fuel supplies. In a hastily arranged meeting at the department for energy security and net zero (DESNZ) on 13 May, a concerned Ed Miliband, the energy secretary, took solace from Prax’s owner and sole director, Winston Soosaipillai. Prax had suffered some setbacks, the seldom-seen oil boss is understood to have said, but it was not in any imminent danger and was even planning investment for the future. Within weeks, these assurances had crumbled to dust. By Friday of last week, ministers had been informed that Prax could not pay its debts – including sums owed to HM Revenue and Customs that the Financial Times reported had reached up to £250m – and was headed for insolvency. The shock update put 625 jobs at risk and sent officials scrambling to keep the refinery going. Prax’s recent woes began to spiral out of control more than a year before the government got wind that anything was wrong. The Soosaipillais bought their first petrol station in 1999, expanding into the importing, blending and storage of fuels. They ran State Oil from a modest £65,000 flat in Weybridge, Surrey, building a multinational oil and gas business with billions in revenue and 1,300 staff in a little over two decades. By 2014, the business was fuelling regular profits, not to mention a steady and increasing stream of dividends. The business continued to grow, via the acquisition of the fuel retail business Harvest Energy and later via the surprise purchase in 2021 of the Lindsey oil refinery from the French oil company Total for nearly $170m (£125m). However, the deal sent debts soaring, and Prax recorded a $75m loss with total liabilities reaching $2.3bn, nearly 10 times the level immediately before the Lindsey takeover. In a letter to staff, Soosaipillai acknowledged that the cost of operating Prax Lindsey had become ‘increasingly unsustainable’. Despite mounting debts, supply deals ensured a constant flow of crude. The refinery, though the smallest of the five remaining in the UK, still accounts for nearly 10% of national capacity. Owning such a strategically important asset has proved lucrative, with the Soosaipillais extracting about £11.5m in pay and dividends since the Lindsey deal. Despite their wealth, the couple did not flaunt it. The government has now ordered the Insolvency Service to investigate the conduct of the directors, primarily Soosaipillai. Those employees must now wait to see if government officials can find a buyer to secure the future of the refinery.
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