Oil giant Essar Oil UK employs 900 people at a huge Liverpool city region refinery on the banks of the Mersey and faces a looming deadline to pay £223m to HMRC in owed taxes. Tony McDonough reports

Mersey oil giant Essar Oil UK (EOUK) says it is confident it will meet a looming deadline to pay HMRC £223m in owed taxes.

EOUK’s huge refinery close to the River Mersey at Stanlow in Ellesmere Port supplies around one-sixth of Britain’s road fuels every year. That equates to 4.4bn litres of diesel, 3bn litres of petrol and 2bn litres of jet fuel for several regional airports.

The company employs around 900 people at Stanlow directly with a further 800 contractors working on the site next to the Manchester Ship Canal. In the spring it emerged the company was seeking extra financing after seeing a “collapse in demand” for its products during the pandemic.

It May it announced it has secured a £600m credit facility to shore up its balance sheet. Now the company has announced it had agreed a further financing deal taking its available liquidity beyond £800m. It also said business was picking up again as the UK emerged from its third COVID lockdown.

On Friday, Sky News reported AOUK was in talks with HMRC to seek an extension to its ‘Time to Pay’ (TTP) arrangement over £233m in unpaid taxes. The Indian-owned business originally owed HMRC £770m but has repaid £547m, leaving a balance of £233m.

AOUK has until January to pay this balance. In a statement it said: “All companies under the TTP have been given until January 2022 to meet their commitments.

“EOUK had agreed to an accelerated schedule to make this payment and is in discussions with HMRC to modify that schedule. EOUK fully expects to meet all payments by the January deadline.” 

The firm said it was in discussions with “all key stakeholders’ with a view to securing a further $300m (around £218m) in extra financing. It added: “The company expects to close these financings by the end of the year. 

Prashant Ruia, chairman of EOUK, said: “The pandemic has led to extremely challenging time for the refining industry in the UK in particular, as a collapse in demand for our end products placed considerable financial and management strain on the business.

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“The overall environment remains difficult, but given the considerable steps we have taken, we are now in a stronger financial position, and importantly, we are seeing improved levels of demand as the market recovers.

“We remain cautious about the medium term outlook for the business. I am pleased with the progress we have made on our VAT repayments and would like to thank HMRC for their continued engagement.” 

Since acquiring Stanlow in 2011, Essar has invested more than £700m in the EOUK business. The site’s largest ever turnaround in 2018 saw the successful delivery of a project that increased annual throughput capacity from 68m to 75m barrels, as well as improving yields and driving revenues.