British taxpayers could be on the hook for more than £1 billion following the collapse of the Lindsey oil refinery in North Lincolnshire.
HMRC is said to be owed £250m in unpaid taxes, while the facility’s decomissioning costs could be up to £3bn.
The refinery is at risk after its owner, State Oil, filed for insolvency on Monday. The Official Receiver has reached a deal with the commodities trading giant, Glencore, that will ensure supplies of crude oil to the refinery.
Ministers have pledged to provide “short-term funding” to cover the operating costs of the facility as a sale process and potential wind-down gets underway.
The urgency of ministers to save the refinery has caused anger north of the border as the government did not make any attempt to underwrite the costs of the Grangemouth plant which has now closed. However, these concerns have been mainly on social media, with little comment coming from the SNP on the issue.
The government has said it will ensure supplies are maintained at Lindsey and support workers and the local community while a buyer is found. Energy minister Michael Shanks has said the government is actively looking for a buyer, but if that process failed then other potential uses for the site would also be considered, leaving Lindsey to a similar fate as Grangemouth.
On the future of Lindsey, one of five remaining UK refineries, one source told The Times: “Private administrators don’t want to take on the responsibilities associated with the refinery, which may have to be shut down in a managed process.
“The wind-down and the complexity of it means it could be very costly, potentially.”
Another said: “The cost of decommissioning is something that I hate to imagine, unless they can find a buyer. You’ve got all the pipelines on the site and the infrastructure: there’s no way it will be less than £1bn.”
Energy minister Michael Shanks said earlier this week that ‘the contingent liabilities are necessary to provide the official receiver and special manager with the necessary tools to fulfil their duties in a beneficial way for creditors and taxpayers.
“If the liability is called, provision for any payment will be sought through the normal supply procedure. The Treasury has approved the proposal in principle.”
source