APPENDIX 1
Memorandum submitted by the Northern Ireland
Office and Northern Ireland Department of Economic Development
INTRODUCTION
The Northern Ireland Affairs Committee is conducting
an inquiry into the illegal sale of fuel oils in Northern Ireland.
The specific terms of reference are:
"to examine the sale of fuel oils in Northern
Ireland on which duty has not been paid and the effect of this
on the legal trade in such fuels".
As the Committee recognises, these matters fall
outside the Secretary of State for Northern Ireland's responsibilities.
Excise duties are an "excepted" matter, where HM Customs
and Excise and HM Treasury have lead responsibility. The Committee
has, however, requested a Northern Ireland input, by way of a
memorandum from the Northern Ireland Office, to inlcude an assessment
of the wider economic and social impact of this trade.
This memorandum does not therefore seek to deal
with the issue of fuel smuggling and the action taken by HM Customs
and Excise and the Royal Ulster Constabulary to counter the smugglers.
GENERAL
The serious difficulties being faced by some
members of the Northern Ireland business community as a result
of the illegal importation of fuel into Northern Ireland have
been brought to the attention of the NIO and DED through correspondence
received from the Petrol Retailers' Association (PRA) and a series
of Parliamentary Questions put down by MPs. We therefore welcome
the efforts HM Customs and Excise and others are making to counter
the problem.
ECONOMIC IMPACT
The Department of Economic Development in Northern
Ireland is not aware of any official figures which would allow
it to quantify the impact on the local economy of the illegal
sale of fuel oils. However, the Department is aware of figures
quoted by the PRA (source unknown) which claim that, for some
petrol retailers, unleaded petrol sales are down by over a quarter
and diesel sales are down by 40 per cent. PRA also claim that
over 40 sites have closed so far due to this problem.
To the extent that the illegal trade causes
local retailers such as petrol stations to close or reduce their
service, there may also be a negative impact on suppliers and
on consumers (arising from reduced choice, increased travel costs
etc).
TRADING STANDARDS
INVESTIGATIONS
On 15 April 1998, a representative of the Retail
Motor Industry Federation contacted the Department of Economic
Development's Trading Standards Service and reported his concern
about the origin of diesel fuel which was being sold at six Northern
Ireland filling stations. His suspicion was based on the pump
price of the fuel in question (as little as 51.9 pence per litre)
when compared to that charged at the major oil company sites (around
66 pence per litre).
Between 20 April and 2 July, Trading Standards
Officers carried out a programme of visits to 39 filling stations
across Northern Ireland (including the six named sites) and tested
the pumps from which diesel fuel was being dispensed. All of the
pumps concerned were found to be approved measuring instruments.
They were also found to be delivering the correct quantity of
fuel. The 39 stations included established sites, offering a range
of fuels, and temporary sites set up to dispense diesel fuel only.
In addition to testing the pumps, between May
and mid-August 1998, 13 samples of diesel fuel were taken and
submitted for laboratory testing by Trading Standards Officers.
Six of the texts indicated that the diesel had been either "laundered"
(ie having the dye removed) or contaminated with another fuel.
HM Customs and Excise have been advised and are now in the lead
on this investigation.
January 1999
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