Memorandum submitted by BP Amoco plc
We were interested to see that the Committee
is conducting a short inquiry into the illegal sale of fuel oils
in Northern Ireland. We know that you are taking evidence from
interested trade associations but we also wanted to let the Committee
know how BP Amoco's business is being affected by this illegal
For some time we have been very concerned at
the large amounts of pirate loads which are being transported
over the border from Southern Ireland and being sold at some dealerships
at lower prices than regular product. Following last week's Budget
changes to fuel duty, price differentials between the north and
south of Ireland have reached an all time high, encouraging more
smugglers to come north and more customers to go south. In some
cases there are record differentials of 29ppl for diesel and 21ppl
for unleaded. Naturally, our company-owned and managed sites obtain
product through the proper, conventional routes as indeed do our
dealers, to the best of our knowledge. They simply cannot withstand
this type of unfair competition and are rapidly losing significant
amounts of business.
Attached overleaf is a chart which shows the
impact on BP Oil UK's business since the smuggling took hold.
This gives you a clear indication of the severity of the problem
and the loss in revenues both to the company and to the Government
in lost duties. Actually this was compiled prior to the recent
Budget changes and so understates the current problem. This is
company confidential information which is not for general publication.
Officials at HM Customs and Excise are aware
of the problem, as are officers from the RUC. There has been some
attempt by them to prevent such loads being brought over the border
and we acknowledge the efforts and support we have had from the
DTI, Customs and RUC officials, but the situation persists.
We are rapidly reaching an untenable position
at many of our sites in Northern Ireland. Should the problem persist
long-term, closure of sites may be a very real option for us and
some of our dealers and one which we would rather not face from
both a business and social impact viewpoint. BP has had a retail
presence in Northern Ireland for very many years and it is causing
great business hardship now and would cause very great distress
to us to close sites in this way.
19 March 1999
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