Prax Lindsey Refinery Collapse: £11.5m in Payouts Amidst Failure

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Prax Lindsey oil Refinery Collapse Triggers Inquiry after Owners Awarded Themselves Millions

The sudden insolvency of the Prax Lindsey Oil Refinery has ignited a firestorm of controversy, revealing that the owners, Sanjeev Kumar and Arani soosaipillai, had awarded themselves at least $15.9 million in pay and dividends leading up to the collapse. With 625 jobs at risk and potential disruptions to essential supplies, including petrol and aviation fuel, the UK government has launched an investigation into the conduct of the directors of the oil refinery.

Government Demands Accountability amid Prax Group’s Financial Woes

News of the ample payouts to Sanjeev Kumar and his wife, Arani Soosaipillai, who served as the group’s human resources director, emerged as the government urged the couple to contribute personally to support the affected workers. Michael Shanks, a junior minister in the energy department, publicly called on Sanjeev Kumar to “put his hand in his pockets” during a parliamentary session on Monday.

Westminster sources indicate that ministers had received assurances about the company’s financial stability just weeks before its dramatic downfall.The refinery, one of only five remaining in the UK, now faces an uncertain future.

Details of the Soosaipillais’ Compensation

Filings from Companies House and a series of annual reports detail the financial rewards reaped by the Soosaipillais. documentation reveals that the group distributed a $5.2 million dividend to its shareholders in 2024, following a $2.1 million payment in 2022. the Soosaipillais, owning 80% of the group directly and 20% through family trusts, are estimated to have received $7.3 million in dividends since acquiring the plant from Total in 2021.

Pay disclosures further indicate that Sanjeev Kumar, as the sole director, received $8.5 million in compensation between 2022 and 2024. the Soosaipillais appear to have accrued £11.5 million in pay and dividends since their acquisition of the refinery.

Union Calls for Scrutiny

Sharon Graham, the general secretary of Unite, has voiced strong concerns about the financial management of Prax. “There are serious questions to be asked about the huge amounts Sanjeev Kumar and Arani Soosaipilla were paying themselves while their business was tanking,” Graham stated.

She further demanded accountability, emphasizing the potential endangerment of national energy infrastructure and the livelihood uncertainty faced by hundreds of workers.

Prax Lindsey Oil Refinery’s Financial Losses

The division overseeing the refinery, Prax Lindsey Oil Refinery Ltd, reported losses of £109 million over the same period during which the Soosaipillais received their substantial payouts. Despite these losses, it’s worth noting that such financial results aren’t unheard of within the volatile landscape of major oil and gas operations, which often feature trading divisions balancing the books.

Further scrutiny of Prax’s accounts revealed a prior instance where the company had to revise its accounting treatment of a proposed dividend payment. This adjustment occurred when Prax realized it lacked sufficient cash reserves to support the payout.

Did You Know? The oil and gas industry is known for its cyclical nature, with profits and losses often fluctuating based on global demand and geopolitical events.

Revised Accounting and Dividend Declarations

In 2023, the Prax Group holding company declared and disbursed a $4.98 million dividend to the Soosaipillais, its shareholders. These payments, initially made “in good faith,” as per Companies House filings, were later found to exceed the company’s distributable reserves. Consequently, the sum was reclassified as an amount owed to the group by “related parties.”

Following the year-end, a new dividend was declared, which, according to accounts, woudl be settled by relieving the parent company of its obligation to repay the previously transferred sums.

Prax’s Response to Inquiries

representatives for Prax,including individuals who have previously responded on behalf of the Soosaipillais,were approached for comment regarding these developments.

Key Figures at a Glance

Name	Role	details
Sanjeev Kumar Soosaipillai	Sole Director	Received $8.5M in pay (2022-2024)
Arani Soosaipillai	Human Resources Director	Joint owner, received dividends

Understanding the Oil Refinery Business

Oil refineries are complex industrial plants critical for converting crude oil into usable products like gasoline, diesel, and jet fuel. The profitability of a refinery hinges on factors such as the price of crude oil, refining capacity, and the demand for refined products.Fluctuations in these areas can significantly impact a refinery’s financial health.

The recent surge in demand for enduring aviation fuel (SAF) is reshaping the industry.Refineries are now investing in technology to produce SAF from renewable sources, presenting both opportunities and challenges for traditional oil refineries.The U.S.Department of Energy provides more insights into SAF technologies and initiatives.

Frequently Asked Questions About the Prax Lindsey Oil Refinery Situation