Orkney and Shetland MP Alistair Carmichael has welcomed news that Treasury Ministers will make a formal application to the EU within weeks for a fuel duty derogation that could see the price of petrol in the Northern Isles cut by 5p per litre.

Answering questions at the Scottish Liberal Democrat conference on Friday, Danny Alexander MP, the Chief Secretary to the Treasury, confirmed that he expected the application would now be made before the 2011 budget and told delegates he was ‘confident’ the government’s plans would be approved by EU finance Ministers. It was thought previously that the formal second stage of the application process would not be reached before next month.

Under EU rules, a formal application must be made to the European Commission before a duty derogation scheme can be introduced. The government’s plans will then go forward for consideration by EU finance chiefs for final approval before the discount can be applied.

Commenting, Mr Carmichael said:

‘I have always said that this derogation was never going to come quickly enough for motorists in the Northern Isles but news that we can now expect a formal application to be made within weeks is welcome. This announcement provides a clear indication of the measure of political commitment behind the scheme.

‘The derogation for the Scottish Islands of 5p per litre will be the largest in the EU after it is applied, and while it will not bring our prices into line with other areas of the country it will go some way towards helping make petrol more affordable in the Isles. This is an important step in the process towards providing relief for local drivers.

‘Ministers are well aware of the strength of public feeling that the current high prices have caused and with the budget approaching I know that Treasury officials are still considering a range of options to help reduce the cost of fuel.’