Select Committee on Northern Ireland Affairs Appendices to the Minutes of Evidence


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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