Companies

Essar Oil UK faces financial woes, top-level exits amid Covid-19

Suresh P Iyengar Mumbai | Updated on April 14, 2021

The company looking for Govt support to sail through

Ruias-owned Essar Oil UK, one of the largest suppliers of fuel in the UK, has run into financial crisis due to a sharp fall in demand amid disruption caused by the pandemic.

The trouble in the company has led to series of top level exits, including the promoters’ representative Rewant Ruia, who resigned as director early this month.

Another director, Stephen Welch, resigned on Wednesday, the company said in a filing.

Stein Ivar Bye, Chief Executive of Essar, resigned last month after five months in the role.

Despite the turbulence, Essar is confident of sailing through and is looking for government support.

Reacting to the development, an Essar Oil UK spokesperson said, historically, the business has been very profitable and has attracted over $1 billion in investment since its acquisition in 2011. It is a long standing private company without public shareholders, he said in response to a BusinessLine query.

The global Covid pandemic has affected all refiners, with repeated lockdowns leading to reduced product demand and depressed refining margins, he said.

“We have successfully traded through a very difficult 12 months and are now seeing increased demand for road transport fuels and improving refining margins, which has resulted in increased throughput at the Stanlow Manufacturing Complex,” said the company’s spokesperson.

“We are not a levered business and currently we do not have any short-term or long-term bank debt on the company, other than working capital lines. Prior to coronavirus, we were generating EBITDA in excess of $300 million a year. We remain confident that we can manage through this period and come out stronger as the economy clearly continues to recover,” he said.

“The company is fully focused on supporting customers and industries who rely on our products as lockdown restrictions are eased. We are excited about our plans to decarbonise Stanlow and increase our supply of sustainable fuels, thereby supporting the UK’s green agenda,” he said.

Stanlow refinery at Ellesmere Port in Cheshire supplies 16 per cent of British road fuel and employs about 900 people.

Essar officials are expected to meet the UK government officials later this week.

Published on April 14, 2021

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