Ship breaking activity at Gaddani, Balochistan grows by 10% in FY10

A super tanker at Gadani for dismantling

I have been highlighting the positives that are happening in Pakistan’s economy and this post is 3rd in the series after motorcycle and tractor sales. Ship breaking activity in Gaddani, Balochistan has increased by 9.4% in number of tons of ship breaking activity in the outgoing fiscal year 2009-10. Government has received 55.1% higher taxes than last fiscal year by getting Rs 1.033 billion compared Rs 666 million in 2008-09. It is worth noting that the Gaddani Ship breaking industry had suffered huge losses in the late 1990’s forcing the activity to be almost reduced to zero because of scrupulous SRO’s by Mian Nawaz Sharif’s government that allowed for duty-free import of scrap steel that usually went into Ittefaq Foundries.

Experts credit the revival of ship-breaking at Gaddani due to the liberal government policy with lesser taxes and duty on import of ships for scrap. It is also worth noting that Gaddani was the top destination for ship breaking around the world but is now number three after India and Bangladesh.

Record 107 ships dismantled at Gaddani

By Parvaiz Ishfaq Rana

Dawn, June 29, 2010

KARACHI, June 28: The ship-breaking yard at Gaddani broke all previous records where 107 ships having a total light displacement tonnage (LDT) of 852,022 tons were beached for scrap during the current fiscal year. Never in the past, such a large number of vessels were brought for dismantling at the yard and even last year when the ship-breaking activity hiked at record level only 86 ships with 778,598 LDT were turned into scrap.

Owing to brisk activity at the Gaddani ship-breaking Yard a large workforce is engaged in dismantling of ships ensuring smooth supply of scrap and steel plates to rerolling mills mostly located in Karachi, and Punjab.

Additional Collector Customs at Gaddani Behan Ali Sher told Dawn that the number of ships could have gone up to 125 by the close of the current fiscal but Cyclone Phet early this month disturbed arrival schedule of many ships.

He said that due to increased breaking of a larger number of ships at the yard the national exchequer also bagged more revenue at Rs1,033.8 million (July to June 26, 2010) as against Rs666.4 million in the same period last year.

The major factor for reviving ship-breaking at Gaddani has been the liberal government policy with lesser taxes and duty on import of ships for scrap. Besides, slump in shipping industry resulted in grounding of more vessels by shipping lines and depressed prices also worked as impetus for the ship breakers.

Ali Sher said that at present all 132 plots of the yard are booked for breaking of ships. Though most of the plots belong to private parties but 30 are owned by the Balochistan Development Authority (BDA).

Though Gaddani presently stands third in term of volume after India and Bangladesh, but in terms of logistic support and performance it excels by far.

Better equipped with breaking facilities the Gaddani shipyard is more efficient than all regional countries’ yards. This could be verified from the fact that a ship with 5,000 LDT is broken within 30 to 45 days, whereas in India and Bangladesh it takes them more than six months for breaking this size of vessel, claimed the additional collector.

The ship-breaking creates diverse economic activity. If it engages around 200 to 300 workers of different categories on each ship around 200 trucks are deployed for delivery of scrap to different cities.

However, the role of BDA, which collects Rs28 per ton as a levy from ship breakers and receives rent of around Rs40,000 to 60,000 per annum on each of its owned plots, has failed to develop any facility at the site.

The ship-breaking has helped to contain smuggling of scrap, which used to come from Iran through Taftan and Afghanistan as most of the foundries and re-rolling mills in the Punjab used it as raw material.

Dewan Rizwan, chairman Pakistan Ship Breaking Association told Dawn that the cost of dismantling ships was increasing day by day and presently, labour engaged in this trade is highest paid.

Against this the price of steel declined to 55,000 per ton from Rs65,000 in the recent past. This results in a loss of around Rs7,000 to 8,000 per ton to the ship breakers.



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