Ship-break­ing in­dus­try set­ting new course

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Pak­istan, In­dia and Bangladesh have be­come the main cen­tres of the world’s ship-break­ing in­dus­try, with only Bangladesh con­tribut­ing al­most 45 per­cent of the global share. Till 1985, Tai­wan and Korea were the lead­ing coun­tries in ship-break­ing while many other na­tions were ac­tively in­volved in this busi­ness. Later, the in­dus­try went through con­sid­er­able con­sol­i­da­tion as ris­ing labour costs and en­vi­ron­men­tal reg­u­la­tions forced the clo­sure of most ship-break­ing yards in de­vel­oped coun­tries. As a re­sult, the in­dus­try shifted to­wards Asia on the back of en­vi­ron­men­tal is­sues that gave a chance to Pak­istan, In­dia and China to emerge as lead­ing in­dus­try driv­ers.

Ac­cord­ing to a 2010 World Bank re­port on the ship-break­ing in­dus­try of Bangladesh and Pak­istan, the ‘global shift’ of the in­dus­try to de­vel­op­ing economies did not only take place be­cause of labour cost ad­van­tage but also be­cause of weaker legal and reg­u­la­tory frame­works in these economies. This links to the ex­ist­ing loop­holes in the in­dus­try that need to be ad­dressed.

Four ma­jor na­tions - Pak­istan, In­dia, China and Bangladesh - with an abun­dance of cheap labour, con­trol more than 90 per­cent of the global ship-break­ing mar­ket. In this con­text, the re­vival of the ship­break­ing in­dus­try in Pak­istan needs to be re­viewed. Through mea­sures for re­vival of the in­dus­try, an­a­lysts pre­dict bright prospects for the de­vel­op­ment of the Gad­dani ship-break­ing in­dus­try on the coast of Balochis­tan.

A ma­jor in­di­ca­tor for this re­vival is the num­ber of ships i.e. 64, which were brought to Gad­dani ship-break­ing yard for dis­man­tling dur­ing the first six months of the cur­rent fi­nan­cial year. Af­ter 2009-2010, Pak­istan has re­ceived such a large num­ber of ships for the sec­ond time dur­ing the last two decades.

In ad­di­tion to pro­vid­ing jobs to thou­sands of work­ers di­rectly, the 64 small and medium-sized old ships presently docked at the Gad­dani ship­break­ing yard, are ex­pected to pro­duce around 400,000 to 500,000 tonnes of scrap, while the gov­ern­ment has re­ceived about one bil­lion ru­pees in cus­toms duty and in­come tax.

The Pak­istani ship break­ing in­dus­try is mainly lo­cated in Gad­dani on the Balochis­tan coast. There are 132 ship break­ing plots in Gad­dani, some 80 scrap melt­ing plots (in­duc­tion fur­naces) and 334 re-rolling mills in the coun­try (250 in La­hore, 16 in Islamabad, 16 in Gu­jran­wala, and 52 in Karachi). Be­ing one of the big­gest in­dus­tries in Balochis­tan, ship­break­ing pro­vides em­ploy­ment to thou­sands of work­ers di­rectly and hun­dreds of thou­sands of peo­ple in­di­rectly.

In the light of a com­par­i­son done by in­dus­try stake­hold­ers, it was re­vealed that the ship- break­ing in­dus­try also con­trib­utes rev­enue to the tune of bil­lions of ru­pees to the fed­eral gov­ern­ment apart from mil­lions of ru­pees to the pro­vin­cial gov­ern­ment. The ship-break­ing in­dus­try has been pay­ing sales tax at the rate of Rs. 4,848 per ton.

The present ca­pac­ity of steel pro­duc­tion in the coun­try is about four mil­lion tonnes against a de­mand of over six mil­lion tonnes and the deficit is met through im­ports. It is planned to raise steel pro­duc­tion up to 15 mil­lion tonnes by 2015. Presently, steel pro­duc­tion units are work­ing be­low ca­pac­ity for want of raw ma­te­rial and be­cause of slack de­mand.

In ad­di­tion to high qual­ity steel, the dis­man­tled ships also pro­vide cheap­est pos­si­ble ma­te­ri­als in cop­per, brass, alu­minum, ma­chin­ery, gen­er­a­tors, boil­ers, wood and tools of in­ter­na­tional stan­dards for meet­ing the ever-grow­ing de­mand of the coun­try’s fast de­vel­op­ing in­dus­trial and com­mer­cial sec­tors.

How­ever, there are a num­ber of de­bates on the en­vi­ron­men­tal reg­u­la­tions en­forced by the in­dus­try. The prac­tice of in­ef­fi­cient han­dling of haz­ardous ship parts and sub­stances ob­tained from the dis­man­tled ships ex­poses the sur­round­ing at­mos­phere to high lev­els of pol­lu­tion. Heavy met­als and plenty of ozone de­plet­ing ma­te­ri­als emit green­house gases. The risks are not lim­ited to the process of parts dis­man­tling only. The re­moval of these haz­ardous ma­te­ri­als through ve­hi­cles, ca­bles and trans­form­ers from the yard poses greater risks. For­tu­nately, Pak­istan is ranked among lead­ing coun­tries where a high level of mech­a­niza­tion of haz­ardous prac­tices has been adopted. This re­duces the risks posed to the en­vi­ron­ment and hu­man life to some ex­tent but not en­tirely.

A World Bank re­port has rec­om­mended ma­jor in­vest­ments in build­ing the in­sti­tu­tional ca­pac­ity of the ship­break­ing in­dus­try in Pak­istan. The ob­jec­tive is to pro­vide pro­tec­tion to work­ers and en­force en­vi­ron­ment reg­u­la­tions. In this con­text, pub­lic-pri­vate part­ner­ships are be­ing rec­om­mended as a re­li­able model for pro­vid­ing sus­tain­abil­ity to the in­dus­try.

Pak­istan must make a range of in­vest­ments to achieve ad­e­quate in­sti­tu­tional ca­pac­ity and pro­vide ground-level en­force­ment of the pro­tec­tion of work­ers and the en­vi­ron­ment in the ship re­cy­cling in­dus­try. Al­though sit­u­ated in a rel­a­tively un­pop­u­lated area in Balochis­tan, the in­fra­struc­ture must be im­proved in terms of the ca­pac­ity and safety for trans­porta­tion of all waste and re­us­able ma­te­ri­als gen­er­ated in the ship-break­ing yards. Sig­nif­i­cant in­fra­struc­ture and ca­pac­ity de­vel­op­ment in the haz­ardous waste man­age­ment sec­tor is re­quired to achieve proper stor­age and dis­posal lev­els lead­ing to com­pli­ance with rel­e­vant in­ter­na­tional agree­ments and guide­lines

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