UK Energy Department support for a threatened oil refinery in England has prompted accusations that no such assistance was offered to keep Grangemouth operating.
The department is reviewing mechanisms for refineries to become eligible for the Energy-Intensive Industries Compensation Scheme after a warning that the Lindsey refinery in Lincolnshire could close.
Prax Lindsey Oil Refinery Limited, which owns the plant in Immingham, filed for insolvency on Sunday, putting 420 jobs at risk.
Prax Group is part of State Oil and is one of only five large oil refineries remaining in the UK after the recent closure of Grangemouth with the loss of 400 jobs.
Clare Boardman, from Teneo, which has been appointed as administrator for State Oil, said they would be “considering all options for the group, including the prospect of a sale for the group’s upstream business and retail operations in the UK and Europe, all of which remain outside of insolvency”.
Michael Shanks, the UK energy minister, said the owner of Prax Group should “put his hands in his pockets and deliver proper compensation for the workers”.
Workers had been “badly let down”, he added, and the government was demanding “an immediate investigation into the conduct of the directors and the circumstances surrounding this insolvency.
“The Secretary of State [Ed Miliband] was reassured by the company that there was no immediate closure risk to the refinery. A week ago, the business changed their position and said they feared it could no longer be a going concern.
“We repeatedly asked them at official and ministerial level what the financial gap was, to work out whether the government could help bridge that gap, but the company were unable to share that basic information.”
The company had left the government with very little time to act, he added.
“The government will ensure supplies are maintained, protect our energy security, and do everything we can to support workers and the local community, including engaging with trade unions and industry bodies,” Shanks said.
“The government believes that the business’s leadership have a responsibility to the workers and the local community.
“We call on them to do the right thing and support the workers through this difficult period.”
Mr Shanks said the government was actively looking for a buyer for the business and, if that failed, other potential uses for the site.
However, there was anger in Scotland that the same sense of urgency was not shown over the crisis at Grangemouth.
SNP energy spokesperson Graham Leadbitter said: “The fact is the Labour Party promised there would be no cliff edge for the oil and gas industry, but this will be the second refinery to face closure on their watch with thousands of jobs being lost in our offshore industries thanks to the Labour Government’s fiscal regime.
“The UK Government was made aware of the difficulties months ago and so clearly we need to see a plan come forward as quickly as possible.
“Of course all options should be considered to keep Lindsey operating, but there was not even so much as an urgent statement for Grangemouth. It would appear that when it comes to British Steel and energy infrastructure south of the Border, Westminster can pull out all the stops.
“It’s no wonder people in Scotland are left questioning why critical national infrastructure becomes more critical depending on its geography.”
Alba party leader Kenny MacAskill, said: “Sympathies are with the workforce and UK Government support for the refinery is the right thing to do.
“But it rings hollow for Grangemouth where no such action was taken. The hypocrisy of Ed Miliband is breath-taking.”
He continued: “It’s two-tier Ed not just two-tier Keir. Scottish refinery workers and communities are ignored whilst south of the Border they’re supported. Yet again evidence of why independence is needed to control our own destiny and economy.”
Prax Group is led by majority owner and chairman and chief executive Sanjeev Kumar Soosaipillai, who bought the Lindsey oil refinery from French firm Total in 2021.
More than 80 potential investors have come forward since the UK Government pledged £200m for the Grangemouth site.
The UK Government is also looking for another £600m from private investment in the area.
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