Fuel-smuggling rises in North

SOARING fuel prices are driving the illegal trade in diesel in the North, making it Britain’s leading region for the trafficking.

“The increased cost in the price of fuel combined with the sterling’s depreciation against the euro has made laundering more attractive,” said John Whiting, head of Customs and Revenue for the North. “The downturn in the economy is no doubt a factor.”

Customs and Revenue estimate the illicit trade costs the British exchequer in the region of £800 million (€915m) a year, with the North — which has less than 5% of Britain’s population — accounting for £160 million of that cost, according to the figures obtained by Bloomberg News from customs.

The Northern figure also includes drivers who fill their tanks over the border in the Republic.

In 2010, Revenue and Customs uncovered some 20 laundering plants in the region, capable of producing 109 million litres of fuel a year at a cost of £71m to the British Treasury.

In 2009, Customs found 16 fuel laundering plants capable of producing 42 million litres of fuel.

Across Britain in 2010, a total of 27 laundering plants were uncovered with the capacity to process 140 million litres of fuel, the data reveals.

Crude oil prices have more than doubled since early 2009 to around $108 a barrel today, pushing the average cost of a litre of fuel in Britain to 138.62 pence, according to price comparison site petrolprices.com.

A report last week indicated that while retail price inflation is 5%, salary increases, excluding bonuses, were 2.2%, underlining the squeeze on incomes.

Fuel for use in agricultural and industrial applications is traditionally discounted by the British and Irish governments. The British government dyes the discounted fuel red and the Irish government dyes it green for security.

Criminal gangs launder the fuel by passing it through an agent, sometimes cat litter or acid, which strips out the dye. The laundering process is often carried out in barns or sheds in rural areas and the fuel is then sold at illegal petrol stations.

Once laundered, the illegal fuel is sold at a discounted price.

“Quite clearly illegal activity is not good for the industry,” said a spokesman for the UK Petroleum Industry Association, Nick Vandervell.

“With higher fuel prices and higher fuel duty and VAT there is a greater incentive to get around paying it,” he said.

Illegal fuel in the North can be bought for 120 pence per litre, while unwashed it costs about 80 pence a litre, said Mr Whiting.

Motorists discovered using the industrial fuel risk a fine of at least £250, as well as the cost of retrieving their vehicle from the police pound.

In March the biggest ever fuel laundering plant in Britain was uncovered in south Armagh, near the border with the Republic of Ireland.

The facility was found to have the capacity to process more than 30 million litres of fuel a year.