Terry Brennan (Fine Gael) | Oireachtas source

Cuirim fáilte roimh an Aire Stáit. Diesel laundering is an issue which I and other colleagues have raised in this House on numerous occasions. Indeed, it is one of the first issues I ever spoke about in the Seanad over two years ago. Diesel laundering is an illegal operation to remove the marker dye from cheaper agricultural diesel and to sell it on as road diesel. As others have said, substantial profits are to be made from this illegal activity, which results in an extensive loss of revenue to the Exchequer and high clean-up costs for local authorities, particularly in Border counties. In my own county of Louth, for example, the local authority has spent in excess of €8 million over the past ten years on collecting, dispatching and forwarding the sludge to Germany for disposal. Those costs were recouped from the Department of the Environment, Heritage and Local Government, but imagine what we could do with that money. We spoke this morning in the House about home help and the need to increase the number of home help hours available. A sum of €8 million would make a significant contribution in that regard.

The problem in Border areas is historic but there is also evidence that the activity is now spreading to other counties, including Meath, Westmeath, Offaly, Galway, Roscommon and Kerry. Indeed, earlier this week a diesel laundering plant was discovered for the first time in Dublin. This plant had the capacity to process more than 2.5 million litres of fuel a year. It is, to my knowledge, the first discovery of a diesel laundering facility in our capital city, which had the capacity to lead to the potential loss of €1.75 million in revenue to the Exchequer. The plant used an unsophisticated method of fuel laundering which involves filtering the fuel through cat litter. I had to read the article in the newspaper twice, to be honest. One wonders what quantity of cat litter is required and where it comes from. As Senator Barrett has said, the launderers have their own scientists among them.

On the enforcement front, action is taken at all stages of the fuel supply chain, tackling both those involved in laundering and the sellers of laundered fuel. In this work, Revenue is supported by well-established structures to ensure very close co-operation between all relevant agencies, north and south of the Border. Indeed, the Minister of State referred to that close co-operation in his opening remarks. The cross-Border fuel fraud group brings together representatives from a number of agencies, including An Garda Síochána, the PSNI as well as the UK and Irish revenue authorities. There has been excellent co-operation between all agencies in identifying and investigating those involved in this fraud.

While there has been considerable success in detecting and closing fuel laundering plants, it is recognised that this approach will not solve the problem on its own. Fuel launderers need to be denied access to marked fuel for the purposes of laundering. They also need to be denied access to a market for their laundered fuel. In addition to the ongoing enforcement action, legislative changes that will enable more effective controls in this sector have been put forward in this year's Finance Bill and are to be applauded. These will lead to the introduction of new licensing requirements for marked fuel traders. The new arrangements will, for the first time, require any person dealing in marked fuel to hold a licence for that purpose. The granting of a licence will be subject to tax clearance requirements and the applicant will have to show Revenue that any conditions subject to which the licence may be granted will be complied with. Revenue will be empowered to revoke a licence if any of the licence conditions is breached.

Steps are also being taken, in close co-operation with the UK authorities, to acquire a more effective fuel marker. Revenue is planning to go to the market shortly with the UK authorities to seek a new marker. A good deal of preparatory research has been undertaken here and in the UK, and the Government expects to proceed with this project shortly. I ask the Minister of State to comment on the status of that project.

The problem of fuel laundering and smuggling is a serious one and the extensive enforcement action that is being carried out on an ongoing basis highlights Revenue's commitment to combating it. Added to the loss of revenue to the Exchequer is the damage done to our environment by the reckless disposal of diesel sludge and by-products from laundering. Scenic areas in my own county of Louth seem to be some of the most strategic places for the launderers to dump these substances.

Motorists normally buy laundered diesel without knowing it. It is entirely possible that I have bought some myself and perhaps the Minister of State has also done so. The chemicals used in the laundering process mean that the protracted use of laundered fuel will damage one's engine. One suggestion made by the legitimate fuel industry is worth pursuing. Agricultural diesel, which has been coloured with a green marker, is for use by farmers and others for off-road machinery.

Why do we not cut off the criminal industry at source by getting rid of green diesel completely and instead introduce a rebate system, as mentioned by Senator Barrett and others? Farmers and genuine users of green diesel could then just buy the normal diesel and be compensated for the difference by claiming it back in their tax returns.