Fuel launderers along the border are “dumping the diesel where once they were dumping the bodies”, the Assembly has been told.
Former republican paramilitaries operating with impunity in the south Armagh region have been blamed for fuel fraud, but there have been virtually no prosecutions, Stormont heard.
The dumped sludge was produced in the treatment of duty-free diesel intended for agricultural use to remove markers which could snare illegal motorists. The toxic waste was even dumped in the same place 10 times, it has been revealed.
Regional Development Minister Danny Kennedy said: “They are dumping the diesel where once they were dumping the bodies.”
“It is inescapable to me that monies generated as a result of this black economy ultimately will find their way back to republican paramilitaries,” the UUP MLA, who represents parts of South Armagh, alleged.
In January it was revealed nobody has gone to jail for fuel smuggling in Northern Ireland in the last decade.
But two heavy goods hauliers face losing their licence for using non-duty paid diesel and 17 more are under investigation, Environment Minister Alex Attwood said.
He added a byproduct sludge produced during the laundering process was dumped in the same part of south Armagh 10 times.
The minister said Holyhead in Wales was being used as a gateway to Britain by haulage firms using black market fuel because controls were not as tough as those in Scotland.
“The situation is acute and there is going to be a need to escalate all the enforcement action,” Mr Attwood added.
He met hauliers earlier this week and said they told him half of companies in the industry were using illegal fuel to undercut them.
The minister told the Assembly small firms in Northern Ireland who have served people well for many years were facing the most immediate threat from competitors using illegal fuel.
”There is a need to have a gear change, a lot of work has been going on but a lot of further work is required,” he said.
Mr Attwood said figures showed up to 30% of heavy goods vehicles were not in compliance with regulations which includes using illegal fuel and other offences.
He promised to write to the relevant authorities and referred to a map he keeps in his office of the locations of illegal waste byproduct dumps.
“It brings home in stark terms what the scale of the problem is and the confidence of organised crime that it can dump this sludge in the same place with confidence and, if you like, impunity.”
Duty-free agricultural fuel is ‘washed’ with toxic chemicals in Northern Ireland, often close to the border, to make it appear legal. The authorities believe some is then driven by hauliers to Dublin port in order to move their goods in to Britain. Environment Minister Alex Attwood has praised Scottish ports for their rigour over fuel smuggling, but has identified a weak spot — Welsh ports such as Holyhead.