Source: Reuters
Essar Oil (UK) Ltd, owner of Britain’s second-biggest oil refinery, on Wednesday said it is making timely payments of the deferred tax bill and will clear all outstanding by the due date of March 2022.
The company had used the UK government’s pandemic VAT deferral scheme in 2020, which allowed businesses to delay tax repayments.
Of the reported GBP 223 million it owed, the firm owned by the Ruia family has paid roughly half of the amount by December 2021 and will clear the remaining by March.
“In September 2021, we confirmed a new time-to-pay (TTP) arrangement had been agreed with HM Revenue and Customs (HMRC), mainly in relation to March to June 2020 VAT.”
“The company has successfully made all due payments in the three months to December 2021 and is on course to complete the balance in the quarter ending 31st March 2022,” it said in a statement.
The payment deferment, it said, was available to all corporates in the UK, due to the severe nature of the impact of COVID on businesses.
The Stanlow oil refinery supplies about a sixth of Britain’s transport fuel.
The TTP arrangement provided for deferment of GBD 770 million of taxes payments.
Of this, the company had previously paid GBP 574 million and GBP 223 million was due.
Of the GBR 223 million, half has been cleared by December 2021.
Approximately 80 per cent of VAT deferred payments have been made in line with a schedule agreed with HMRC, the firm said.
Essar Oil UK operated Stanlow as normal during the recent fuel crisis in the country and supplied fuel to north-west petrol stations as normal.
The company said December 2021 saw the highest monthly volume of product sales for 18 months since the start of the pandemic and the EBITDA run rate is now at annualised USD 300 million level.
“In May and September, EOUK announced that it had closed new financial arrangements with liquidity from a diversified range of sources, aggregating USD 1.1 billion. Additional financing has been secured during the quarter ending December 31, 2021, with last-mile financing on the plan to complete in the next couple of months,” the statement said.
The company said the continued strength in both demand and product margins in the market is now leading to the generation of EBITDA at an annualised rate of approximately $ 300 million.
“This is approaching the levels seen in the five years prior to the onset of the coronavirus pandemic. Market analysts expect strong demand for refined products in the coming years on the back of a robust recovery in economic activities globally, and particularly in the UK,” it said.
A stronger trading environment saw the company record its best monthly product sales for 18 months in December 2021 across both fuels and petrochemicals, with demand now back to 95 per cent of pre-COVID levels.
In addition, Essar is re-entering the Irish market having recently secured a contract to supply fuel, starting this month.
Despite the significant impact of the pandemic across the entire refining industry, including a period during which fuel demand was at very low levels, Essar continued to operate the Stanlow Manufacturing Complex at a significant capacity to ensure adequate fuel supply to its customers across the UK.
Stanlow remains a key strategic national asset, annually producing over 16 per cent of the UK’s road transport fuels.
Deepak Maheshwari, Essar Chief Executive Officer, commented: “Over the last quarter, the company has been able to strengthen its financial performance due to improvements in the product market and delivery of reliable and stable operations at Stanlow.”
“We have also closed the defined pension benefit scheme for future accruals, which will provide long-term security of competitiveness for the company. Going forward, we will invest in projects such as HyNet which will enable the country’s transition to a low carbon economy.”
