THE PROBLEM of diesel laundering is “out of control” but the Government has not grasped the enormity of the crisis, an Oireachtas committee has heard.

David Blevings of the Irish Petrol Retailers Association told the Oireachtas Committee on the Environment and Transport yesterday that the Government was losing more than €150 million a year from fuel fraud.

Because agricultural diesel is substantially cheaper than regular diesel, a dye is added. Diesel launderers wash the dye out so it can be sold at a higher price.

Mr Blevings said washed diesel was previously only sold through unbranded filling stations but now it was being sold through branded outlets. There were even suggestions that criminal networks were setting up filling stations to sell this fuel. The penalties did not frighten offenders.

Gerard Moran, assistant secretary at the Revenue Commissioners, said 32 filling stations had been closed in recent months following the tightening of the licensing regime for road fuels.

Nine diesel laundries containing 327,000 litres of oil were uncovered last year. “Overall, we seized over one million litres of oil last year, including oil seized from unlicensed premises.”

Kieran Duffy, executive engineer at Monaghan County Council, said there had been “a dramatic increase” in the number of incidents where diesel laundering residues were dumped in the county. Some 37 incidents were recorded last year, and there were already 10 incidents in January. Since 2003 the Department of the Environment has paid almost €5 million to dispose of such waste.

The suggestion that the price differential between agricultural and road diesel be removed and a rebate system set up for farmers was rejected by the Irish Farmers’ Association. Its president, John Bryan, said a rebate system would involve more paperwork and there would be a significant cost in administering the system.

The Government should introduce “a robust, non-removable marker” for agricultural diesel.