Two of the North's major fuel-suppliers have insisted they will act decisively against petrol-station operators who deal in illicit or smuggled product.
BP, which has 49 outlets in Northern Ireland, said it had removed pumps and signs from two outlets since 2000 for selling illegal supplies. Shell, which has 43 stations in the North and 250 in the Republic, said it had lobbied the Irish Government for tougher measures to tackle fuel fraud and stopped contract arrangements with some independent suppliers in the North in the past two years.
A report published on Wednesday by a committee of Westminster MPs said £380 million was lost to the British Exchequer in Northern Ireland through cross-Border smuggling and legitimate fuel sales to motorists living near outlets in the Republic. Fuel-smuggling costs the Exchequer about £1 billion throughout the UK as a whole.
Some 50 per cent of the £380 million is accounted for by smuggling, a situation which the MPs said was unacceptable.
"It is a scandal that in one part of the UK approximately half of all garages are selling illicit fuel, which brings the tax system into disrepute," they said.
The MPs' report claimed that, of the 700 filling stations in the North, some 450 sold illegal supplies while as many as 250 sold only smuggled fuel. Paramilitary involvement in the widespread scam required "joined-up action" to counteract the problem, the report said.
An Organised Crime Task Force, chaired by the North's Security Minister, Ms Jane Kennedy, is examining the problem.
Legitimate cross-Border fuel sales are big business as dealers capitalise on significant differentials in price. A litre of diesel is around 75.9p and ordinary unleaded petrol sells for 74.9p in the North. Filling stations, which have sprung up on the southern side of the Border and sell many thousands of litres per week, sell diesel for the euro equivalent of around 51p and unleaded petrol for 58.7p.
Filling stations are almost always branded by a major petrol-supplier, but are run in a variety of ways. Some are owned and run by the supplier, such as Texaco; some are franchised out, while many smaller outlets are dealer-owned and dealer-operated and known as "dodos".
Petrol-suppliers stress that they apply strict standards to ensure fuel standards are maintained. A Shell spokesman told The Irish Times yesterday: "Illegal fuel smuggled from the Republic along with legitimate cross-Border sales have resulted in the amount of Shell fuel sold in Northern Ireland decreasing in recent years."
One fuel dealer on the southern side of the Border contacted yesterday by The Irish Times said about 98 per cent of trade was cross-Border. The retailer added that some customers purchased large quantities of fuel, a legitimate practice, but suspected it could be used for resale in the North, which is illegal. The retailer said there was nothing to be done to stop this since no crime was committed on the forecourt.
Illegal reselling is only part of the problem. Tax-rebated diesel for agricultural use, which is dyed red in the North and green in the Republic, is treated with aggressive acids by criminals and then sold at massive profits. The process, called "washing", is carried out at secret laundering plants across the North. The PSNI has claimed success in countering the practice.