Colm Keaveney (Galway East, Fianna Fail)
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264. To ask the Minister for Finance the actions he has taken to combat the practice of petrol stretching; his plans to increase the penalties for same, including criminal convictions for operators of service stations engaging in this practice; and if he will make a statement on the matter. [42164/14]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners, who are responsible for tackling fuel fraud, that they are very aware of the risks posed to consumers' vehicles, legitimate businesses and the Exchequer by all forms of such fraud.

Revenue has, over the recent past, received reports from a variety of locations around the country of problems relating to petrol quality, and suggestions that these problems are attributable to petrol stretching. Petrol stretching involves the illegal addition of a low tax commodity to petrol to defraud motorists and the State.

Revenue investigates all complaints of this kind and fuel samples are taken from filling stations and referred to the State Laboratory for analysis where the investigating officers have reason to suspect excise fraud. To date 48 premises nationwide have been tested with samples referred to the State Laboratory.

Conclusive results have been received in one case which confirms contamination through the presence of kerosene and Revenue are considering the possibility of prosecution in this case. Final results are awaited in respect of the other samples referred for analysis. It is understood the State Laboratory is reviewing its existing procedures with a view to expediting testing which, I am informed is quite complex.

The Deputy can be assured that, if Revenue's investigations and the analysis of fuel samples indicate the presence of illegal stretching agents in petrol, Revenue will take action and pursue prosecutions against offenders where possible.

Petrol stretching is an offence under section 102 (1A) of the Finance Act 1999. It carries a penalty on summary conviction of a fine of €5,000 or a term of imprisonment not exceeding 12 months, or both a fine and imprisonment. Where conviction occurs on indictment, a fine of up to €126,970, or a term of imprisonment of up to 5 years, or both a fine or imprisonment, may be imposed. The fine that may be imposed where a conviction occurs on indictment was increased substantially by the Finance Act 2010. I have no immediate plans to increase penalties, but I will keep the matter under review. 

I understand also that Revenue has been in contact with the motor and fuel trades about the reported problems. Cooperation with the fuel trade has been an important element in the successful work undertaken in recent years to combat fuel fraud, and can play a key role in addressing any further issues that come to light. It is essential, in particular, that petrol distributors report on any reduction in the pattern of legitimate supplies of fuel to the retail trade which may indicate that specific traders are shifting some of their sourcing to illegal fuel.

Motorists themselves should take care about where they source their petrol, and should report any suspicions to Revenue. Revenue has recently launched a dedicated section of its website specifically dealing with the shadow economy and this includes a reporting facility for anyone who has information about shadow economy practices including the adulteration of fuel.

An extensive range of new measure has been introduced over recent years to tackle fuel fraud, including enhanced supply chain controls and the acquisition of a more effective fuel marker. Key measures include the following:

- The licensing regime for auto fuel traders was strengthened with effect from September 2011 to limit the ability of the fuel criminals to get laundered fuel onto the market;

- A new licensing regime was introduced for marked fuel traders in October 2012, which is designed to limit the ability of criminals to source marked fuel for laundering;

- New requirements in relation to fuel traders' records of stock movements and fuel deliveries were introduced to ensure data are available to assist in supply chain analysis;

- New supply chain controls were introduced from January 2013 following significant investment in new IT systems. These controls require all licensed fuel traders, whether dealing in road fuel or marked fuel, to make monthly electronic returns to Revenue of their fuel transactions. Revenue is using this data to identify suspicious or anomalous transactions and patterns of distribution that will support follow-up enforcement action where necessary, and

- An intensified targeting, in co-operation with other law enforcement agencies on both sides of the border, of enforcement action against suspected fuel laundering operations.

In addition to the measures implemented to date, Revenue has, in partnership with Her Majesty's Revenue and Customs in the UK identified a more effective fuel marker and it is expected that a new marker will be introduced in both jurisdictions early in 2015 following consultation with the oil industry and other stakeholders.

To support further the integrity of the distribution system and minimise the risk of fraud, I introduced a provision in the Finance (No. 2) Act 2013 that will make a supplier who is reckless in supplying rebated fuel for a use connected with excise fraud liable for the duty at the standard rate of tax. This new provision will strengthen Revenue's hand in dealing with those traders supplying rebated fuel recklessly to dubious customers and will provide a further disincentive to such activity. Revenue has published guidelines for mineral oil traders which will assist them in identifying and avoiding such transactions.

I am committed to providing new measures to further assist Revenue in its work against fuel fraud should they be required.