Britain strikes tax deal with oil refiner Essar as fuel panic persists

Britain threw refiner Essar Oil UK (EOUK) a lifeline on Tuesday, September 28, with a phased tax payment deal, allowing it to keep producing just as the country struggles with motorists draining gasoline stations in a panic-driven buying frenzy.

EOUK, which runs the 200,000-barrel-per-day Stanlow refinery, had been in talks with HM Revenues & Customs (HMRC) over extending a January deadline to repay hundreds of millions of pounds in deferred taxes.

“With this time-to-pay arrangement, we now have significant runway to stabilize our balance sheet which has been adversely impacted by the pandemic,” EOUK’s chief financial officer Satish Vasooja said in a statement.

Britain, which is preparing to hold the COP26 global climate summit in Glasgow in November, has seen drivers snarled in queues to fill their tanks and dozens of forecourts closed, with fuel prices reaching record levels.

“The improved environment around margins gives us the confidence to continue to serve as one of the UK key fuel suppliers with a 16% market share,” Vasooja added.

A post-Brexit shortage of truck drivers, exacerbated by a halt to truck-driving-license testing during COVID-19 lockdowns and people leaving the haulage industry, has sown chaos through supply chains, raising the specter of shortages and price rises.

Essar Oil has said it still needed to pay 223 million pounds ($305 million) to HMRC by January. It said the new deal with HMRC was designed to fit with its revenues.

“Road fuel sales volumes from EOUK’s Stanlow, Northampton, and Kingsbury terminals over the last weekend (September 25-26) were up 22% against a ‘normal’ weekend (pre-COVID),” Essar said as many petrol stations saw long queues.

“On Friday (September 24) sales volumes from the three terminals were up 14% on a ‘normal’ Friday,” it added. – Rappler.com

$1 = 0.7311 pounds