Over half the petrol stations in Northern Ireland are being accused of selling fuel smuggled from the Republic, according to the British National Audit Office (NAO).
Britain’s Customs and Excise said up to 450 out of 700 filling stations sell some illicit fuel and that as many as 250 sells illegal fuel.
The NAO, the Whitehall spending watchdog, said the illegal trade is due solely to cross-border smuggling from the Republic where lower fuel duties means diesel is around 29p sterling a litre cheaper than in the North.
In Britain, fuel duty fraud - mainly involving diesel - cost the Treasury there an estimated £450 million sterling in 2000. In the North alone the loss due to fraud and legitimate cross-border shopping was put at £380 million sterling.
Customs also found more diesel-laundering plants - where fraudsters process duty-rebated "red" diesel, intended for off-road farm vehicles, for on-road use - operating in the North than the rest of Britain.
Criminals had found if they mixed the "red" diesel with the equivalent "green" diesel used in the Republic in the right proportions, it neutralised the effects of the dyes, leaving the fuel a normal diesel colour.
Chairman of the British Commons Public Accounts Committee Mr Edward Leigh, described the scale of the illicit trade in Northern Ireland as an "incredible state of affairs".
"Fuel smuggling, especially if oil is carried in makeshift tanks on ferries, can endanger lives. And it provides income for organised criminal gangs, a highly worrying problem for Northern Ireland in particular," he said.
PA