As recently as November, the publicity-shy owner of Prax Group wanted investors to know that his $10bn challenger company was fast becoming a “formidable force” in the energy industry.
“Twenty-five years on from when we started, we are a much bigger, stronger, better business in all kinds of ways,” founder and chief executive Sanjeev Kumar Soosaipillai said in the introduction to Prax’s glossy annual report.
Those ambitions came crashing down this week when the sprawling company’s parent entity, and its oil refinery in north-eastern England, plunged into insolvency, putting more than 400 jobs at risk.
The move provoked a fierce backlash from the UK government, which demanded an investigation into Prax’s “wealthy owner”, whose conduct left authorities “with very little time to act”.
The collapse of the Lindsey refinery — which produces about a tenth of the UK’s fuel and is one of only five such facilities left in the country — is a cautionary tale of a company that grew too big too fast, say insiders, and of a critical industry that has been overlooked by government.
“Prax didn’t have the right people in place to manage a risk as big as a wholly owned refinery,” said a person familiar with Prax’s operations. The person also said that the group run by Soosaipillai and his wife Arani — who started out with a single petrol station — lacked the financial heft to manage such a cash-hungry business.
UK government officials were informed of the commercial difficulties at Lindsey at the end of April and energy secretary Ed Miliband met Soosaipillai in mid-May to discuss how the government could provide support. Yet Prax was still insisting until last week that the facility on the river Humber was not at risk of closure, according to UK under-secretary for energy Michael Shanks.
Industry executives familiar with Prax described a company that was “a bit smoke and mirrors”, struggling to balance its books for several years, even as it completed acquisition after acquisition.
“There are very few people who are shocked this happened,” said a senior commodity industry executive. “Why was Prax, who owned a refinery that was struggling, always on the bid for fancy assets in other jurisdictions? It never made sense.”
Winston Sanjeev Kumar Soosaipillai — who goes by Sanjeev — met Arani at the University of Kent, where they both studied accountancy. The Sri Lankan-born pair, then still in their twenties, bought their first filling station in 1999 near St Albans, north of London.
Over the next decade, they sold their homes and mortgaged the houses of family members to help acquire more outlets and eventually a storage site in east London. In 2015, they completed a transformative deal, acquiring struggling Harvest Energy and its network of UK forecourts for $22.6mn.
Four years later, Prax brokered an agreement to operate petrol stations for TotalEnergies under the French major’s brand. It was a relationship that left the UK company in a strong position when Total decided to sell the Lindsey facility in 2020 amid a collapse in oil prices during the coronavirus pandemic.
Prax swooped, paying $167.6mn in a deal that also gave it control of the Fina oil pipeline, which runs through the east of England. It was a big acquisition but, within a year, Prax had revalued the refinery assets in its accounts at $667.8mn, booking a $500mn gain based on “synergies” with the rest of its business and improved refining margins — a move that immediately raised eyebrows in the industry.
“In effect, Prax was saying it could run the refinery better than the much larger Total,” said one industry executive. It was “one of the big red flags” in the company’s operations, the person added.
Refining is a high-volume business with generally thin margins. Lindsey can process up to 113,000 barrels a day of oil, which is bought from a supplier and processed before being sold on to customers. Lindsey is supplied by commodities trading company Glencore under a deal signed last year.
At current prices, that means Prax requires access to an estimated $400mn of working capital to keep the facility running. Prax’s group turnover ballooned from $3bn in 2020 to more than $10bn in 2024.
Maintaining adequate liquidity is crucial to any refinery’s success, and this became harder for Prax as it continued to expand. In 2023, Prax announced the acquisitions of a North Sea oil producer, a European petrol station network and a minority stake in a refinery in South Africa.
But even as the deals continued, inside the business executives were concerned. In autumn 2023, Deloitte seconded a partner, David Sharman, to work directly with Soosaipillai for several months as part of an exercise known as Project King, according to people familiar with the contract.
Referred to internally by some executives as project “cash is king”, the exercise was intended to “reduce costs, streamline processes, increase efficiencies and enhance our effectiveness”, Soosaipillai wrote in the 2024 annual report.
“There were multiple phases [of Project King] as things got more desperate,” one of the people said.
Around the same time, Prax changed its accountant from KPMG to the lesser-known PKF Littlejohn, company filings show. KPMG and Deloitte declined to comment, while PKF did not respond.
In the year ending February 2024, Prax’s parent company State Oil Ltd and the refinery’s operating unit Prax Lindsey Oil Refinery Ltd reported losses after tax of $28.7mn and £40mn, respectively. Despite the losses, State Oil paid a dividend of $5.2mn to the Soosaipillai family, the accounts published in November 2024 show.
Sanjeev and Arani Soosaipillai each own 40 per cent of State Oil, with the remaining 20 per cent held by two trusts, one for each of their daughters, according to corporate records and a person familiar with the structure.
Although UK refineries face challenges ranging from carbon costs to competition from larger foreign rivals, the sector has been performing reasonably well, and Lindsey’s collapse was not inevitable. “It’s not like margins have suddenly collapsed,” said Alan Gelder, refining expert at Wood Mackenzie.
However, a lack of refining expertise on Prax’s senior leadership team contributed to operational and commercial mis-steps that exacerbated Lindsey and the wider group’s liquidity problems, one of the people familiar with the company’s operations said. Rather than rely on expensive bank credit facilities, Soosaipillai preferred to provide counterparties with cross-group guarantees often from State Oil, the person added.
Such guarantees are one reason that the parent company and several subsidiaries, including Lindsey, Prax Petroleum, Harvest Energy and Harvest Energy Aviation, have all entered administration at the same time.
Prax’s UK and European retail business, Axis Logistics, and its upstream and international operations are all excluded from the insolvency process, according to a statement on Prax’s website.
Glencore’s supply agreement gives it security over some of the oil on site at Lindsey and a potential claim over some of the entities involved, according to people familiar with the situation. Glencore said it was working with stakeholders to support “a safe and responsible outcome for the refinery”.
Sanjeev and Arani Soosaipillai, who rarely give interviews, did not respond to an emailed request for comment. Neither they nor their company has issued a statement since State Oil entered insolvency.
“I wouldn’t be surprised if he’s heartbroken and working his you-know-what off to salvage anything from this business,” said one person who has worked with Soosaipillai.
“This is his life,” the person added. “What for you and me is breathing, for him is Prax.”