64 foreign ships arrive at Gadani
February 11, 2011
At least sixty-four ships have arrived at the Gadani ship-breaking yard from various countries for scrapping during the first six months of current fiscal year. More are expected to reach shortly.
According to a senior official of Customs, the ship breaking industry is likely to flourish once again in the country with the arrival of 64 old small and medium size ships. After FY2009-10 the country has received such large quantity of ships second time in last two decades.
He said that it would not only provide job opportunities to thousands of workers, but would also provide a boost to the steel industry because these 64 ships are expected to produce around 300,000 tonnes of scrap.
He said that government had received around Rs 1 billion in customs duty and income tax on import of these ships. The official said that the ship breaking industry was at its peak in the 1970s when up to 150 ships were brought to the Gadani ship-breaking yard.
However, the industry lost its charm in the 1990s when the prices of old ships increased and duty was imposed on ship breaking. He said that this led to an increase in the smuggling of scrap from Iran and Afghanistan to Pakistan. The smuggling would now come to a halt after the revival of the local ship-breaking industry, he said.
According to Pakistan Ship Breakers’ Association (PSBA) president Dewan Muhammad Rizwan Farooqui around as compared to last year the scrapping activity is bit low this year because of high prices of ships in international market. “Seeing last year activity we were expecting more number of ships this year, but high prices of ships and increasingly buying of ships by India and China from international market keeping the prices high”, he said.
”The average price of a ship hovering between $510-$530 as compared to $420 at the start of 2010”, he said adding that depreciating rupee-dollar parity is also a major problem for the local ship breakers.
He was of the view that despite around 20-22 ships breakers are working in the county but government’s less interest in this industry this has not been upto the expectations. Environment problems coupled with labour high demands are the major problems at Gadani Ship yard. “Labour cost is much higher in Pakistan as compared to other regional countries”, he said adding “we are paying Rs 10,000 salary to per labour that is highest in the region.”
“But we still are hopeful that in the current fiscal year we will be able to produce about 550,000 tonnes of steel scrap.”
He said that the ship breakers had set a target to produce around 500,000 large displacement tonnage (LDT) steel scrap by the end of the fiscal year as the local demand for ship billets and scrap metal had surged sharply.
Downturn in construction and engineering sectors besides decreasing international prices of raw material had reduced the demand for steel about six months ago.
Farooqui said that around 8,000 workers were earning their livelihood at Gadani dockyard and with this increase in pace of work the number of employment opportunities would increase.
PSBA president said that Pakistan’s ship breaking industry made available 152,260 LDT steel and metal scrap through dismantling of 34 ships of various sizes in 2007.
In the last 10 years, the ship-breaking industry had produced 926,067 LDT scrap by breaking up 64 vessels of different sizes. The industry had contributed Rs 3.53 billion to the national exchequer on account of taxes and duties during this period.
He said the ship-breaking industry had seen its peak in the 1980s when it was called the biggest ship breaking industry in the world. It used to provide employment to over 30,000 workers directly, while over a half million people earned their living indirectly from industries which used ship scrap as raw material. In 1985-86, the ship breaking industry helped the country in making an annual saving of Rs 1.5 billion, which would otherwise have been spent on import of iron and steel
The country’s ship breaking industry needs government complete attention as Construction and engineering industries of Pakistan depend on the steel re-rolling industry, which acquires its raw material from ship-breaking or imported scrap.
Under the new policy the steel production target was set at 10 million tonnes by the year 2015 and 15 million tonnes by the year 2020. The present capacity of steel production is four million tonnes as against demand of over 6 million tonnes per annum, showing a gap of 2.5 to three million tonnes, that is, being met through import. The steel production units are functioning bellow capacity because of raw material shortage and slack demand.
A ship’s life lasts for an average of 25 to 30 years after that it is supposed not safe to sail. About 95 percent of these ships are dismantled to recover steel. Scrapping a ship can make the owner an earning of about $1.9 million. However, the ships built before the 80’s have tonnes of extremely toxic substances, hazardous to human and environmental health.