John O'Mahony (Mayo, Fine Gael)
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I thank the Ceann Comhairle for selecting this important topic. I have raised the issue of fuel laundering and fuel abuse on many occasions. Fuel smuggling and fuel laundering has been a problem here for many years but since the beginning of this year in particular when the sulphur content in off-road diesel was reduced, which made it much more difficult to detect illegal fuel, it has reached epidemic proportions.

The extent of the problem was illustrated when one of the fuel laundering operations uncovered this year was believed to be making a profit of €100,000 per week. Between 2005 and 2011 I understand nine illegal operations were uncovered. Up to June this year five were uncovered and I believe there have been more uncovered since then. One uncovered had the capacity to launder up to 18 million litres per annum, with a loss to the State of €9 million.

The question also arises as to how this fuel finds its way to the public. It is being sold in service stations that are rented on short-term leases. With a duty difference of almost 40 cent per litre, up to €15,000 per tanker is being made by these illegal operatives. These operations have been taken over essentially by criminal elements that have moved from the drugs trade or other criminal undertakings but the effects on the people who are upholding the law, paying their taxes and giving employment is that hundreds of jobs are being lost in the legitimate industry as a result of this activity.

The solutions to this problem are a detection method; a DNA tracer to be put in place; and an audit trail to find out where the fuel is being bought and to whom it is being sold.

In regard to fines and penalties, an issue arose this year where a garage was closed for one day and fined €3,000. If these people are making €14,000 a tanker that is not a very punitive sentence.

Ray Butler (Meath West, Fine Gael)
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I thank the Ceann Comhairle for giving me the opportunity to speak on this important issue of fuel laundering. This problem was recently brought to my attention by several forecourt owners and a major petrol supplier in my constituency of Meath West who informed me that approximately 15 to 20 filling stations which closed and have since reopened are now selling laundered diesel. The same forecourt owners now state that their turnover on petrol and diesel has diminished significantly as a result of the availability of laundered diesel throughout Meath West.

Statistics given to me suggest that in Ireland alone there are 120 to 150 diesel laundering providers throughout the country costing the State a possible €200 million to €300 million in lost taxes per year. These illegal suppliers are selling the laundered diesel at a profit of 40 to 45 cent per litre and are selling petrol, which has been bought legitimately as petrol cannot be laundered in the same manner as diesel, at cost price. As they say in the business, petrol is a loss leader and is only a means to encourage customers onto their premises to buy the illegal laundered diesel and to spread the word among the general community that it is available for sale. This washed diesel is detrimental to the engine of any vehicle, rendering the engine useless if used over an approximate period of time, for example, 12 to 18 months.

The forecourt owners in my constituency have said that if this practice continues their business will fall under even more stress and it will eventually result in the loss of staff at the very least. Revenue and Customs officials are doing their best to address this problem but as soon as one illegal supplier is closed down another takes over the closed facility and the cycle of events commences again.

In the light of the evidence of the great extent of this illegal activity I sincerely hope that better control can be gained over this problem, whether by putting more dyes into the diesel or examining the possibility of having one form of diesel available in the market. Having spoken at length to the forecourt owners, business people and members of the general public in my constituency who have been directly affected by the effects of laundered diesel I urge that this matter be given further consideration by the Government and every effort made to eradicate the availability of this illegal laundered diesel.

Brian Hayes (Dublin South West, Fine Gael)
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I thank both Deputies Butler and O'Mahony for raising this important issue that affects not just the people in the constituencies both Deputies referred to but adversely affects the ability of the Revenue Commissioners to raise tax legitimately and keep in business those suppliers and producers who are paying their taxes legitimately.

I am informed by the Revenue Commissioners, who are responsible for the collection of mineral oil tax and for tackling the illicit trade in fuel products, that they are very conscious of the threat to the Exchequer posed by the laundering of markers from mineral oil. Marked gas oil, commonly known as green diesel, is subject to mineral oil tax at a rate of €88.66 per 1,000 litres, while the rate for auto-diesel is €465.70 per 1,000 litres. In addition, marked gas oil is subject to the lower VAT rate of 13.5%. The resulting total tax differential is around 50 cent per litre. As the Deputies rightly point out, there is enormous advantage for those people who deal in this illicit trade.

This differential offers a very significant incentive for "oil laundering", that is, the removal of the chemical marker from marked gas oil to facilitate illegal use as auto-diesel. This is a particularly serious offence, carried on by organised criminal gangs. It carries a maximum penalty of €126,970 or five years imprisonment, or both. Any equipment used for oil laundering and any vehicle found to be transporting laundered fuel is liable to forfeiture.

As with other illegal activity, it is not possible to provide a reliable estimate of the extent of oil laundering activity. The Revenue Commissioners, who are responsible for mineral oil tax and the control of mineral oils, are tackling this issue on a number of fronts.

There has been ongoing extensive enforcement action, which has led to the detection of oil laundries and the prosecution of individuals and companies involved. To confirm what Deputy O'Mahony said in his opening remarks, in 2010 four oil laundries and over 288,000 litres of laundered oil were seized. Also in 2010, nine retailers were found dealing in laundered oil, and eight haulage companies were detected using laundered oil. There were four convictions for laundered oil offences.

Already in 2011, eight laundries have been detected and more than 300,000 litres of laundered fuel have been seized. There have been 11 arrests resulting from these operations, and eight tankers and 19 other vehicles have been seized. Several retailers and haulage companies have also been implicated. One can see in the difference between the figures for 2010 and 2011, even with the incomplete information we have for this year alone, the very substantial rise in this activity even in a 12 month period, to which the Deputies have referred.

Revenue has played an integral role as part of a cross-Border multi-agency organised crime task force which has been set up specifically to deal with the illicit trade in mineral oil in the Border area. The multi-agency operations are planned to supplement the normal ongoing level of Revenue detection and enforcement activity. Since its inception this combined force has successfully targeted a number of illegal operators in the Border area.

Catherine Byrne (Dublin South Central, Fine Gael)
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The Minister's time is about to conclude.

Brian Hayes (Dublin South West, Fine Gael)
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I will take questions from the Deputies.

John O'Mahony (Mayo, Fine Gael)
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I pay tribute to the Revenue and Customs Service for the increased detection but that could be viewed in another way, namely, that this practice has become so epidemic they are still only scratching the surface, so to speak. First, will the Minister indicate if extra resources have been allocated this year to the detection of these sites and service stations? Second, regarding the fuel, what is the up to date scientific diagnosis? Has science overcome the detection problem, which was increased because of the low sulphur level in diesel? Has it caught up with that? Is illegal fuel more detectable than it was six months ago, for example? If not, we still have a problem.

Ray Butler (Meath West, Fine Gael)
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The Minister for Finance said that a laboratory in Sligo is starting to look for better quality dyes to put into the diesel. Does he know any more about that? There are environmental concerns because much of the laundered diesel is washed through the Turkish sand that is coming into the country in container loads, all of which has to be dumped somewhere, so that will have to be looked into. I agree with Deputy O'Mahony that the hands of Revenue and Customs and Excise officials are tied because of cutbacks and the fact that they need more staff. In my area, the problem is getting out of hand and we will lose many jobs because legitimate petrol stations will close. I have heard concerns about the issue from people who have visited my constituency office. Business has gone slow at a petrol station on the Dublin Road and the owner is worried that he will go out of business if the situation continues. Fuel laundering is having a knock-on effect throughout the country.

Brian Hayes (Dublin South West, Fine Gael)
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Deputy O'Mahony made a crucial point on the science of the subject and asked, given that these substances can be washed through, whether we are any closer to developing a means whereby we can be confident that the diesel people buy is the diesel they expect. It would be wrong to say we have resolved the issue, but we are working closely with all concerned to come up with a solution. Licensing is an important issue and we have made sure that licences have been revoked or refused on the basis that we cannot stand over the authenticity of the supplier concerned. That is another important aspect.

Both Deputies asked what more can be done. In discussions with the Revenue, the Minister is considering measures in the context of the upcoming finance Bill to strengthen further the controls relating to all aspects of mineral oil trade. Where further measures are considered necessary, they will be put in place. There is a high level of co-operation between the Revenue and HM Revenue and Customs in the UK. Increased co-operation is the order of the day. I am not going to second guess that and go into further detail, but I assure the House and the two Deputies who raised this important issue that high-level co-operation is taking place between all agencies on this island to stamp out this practice, and this co-operation will increase further to ensure we deal with this scourge. I assure the Deputies that, even in these difficult times when the Revenue, like any public sector organisation, is finding it difficult to meet requirements because of the number of people employed in the public sector, we are determined to stamp out this practice and use every measure we can, in co-operation with our colleagues in the UK, to beat the problem. I thank the Deputies for highlighting this important issue.

Ray Butler (Meath West, Fine Gael)
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I would just like to say to the general public that, if they drive past a petrol station and see that diesel is 10 or 15 cent cheaper, they should be aware of the health of their car.