Ship-breaking picks up pace at Gadani

[LahoreEstate]

Fearing re-imposition of customs duty and sales tax, which were removed recently, importers are trying hard to bring in as many vessels as they can before the end of current fiscal year on June 30. - White Star photo by Fahim Siddiqi

KARACHI: The ship-breaking activity has further intensified at Gadani where presently around 70 ships are beached for dismantling and another seven to eight ships are waiting at the outer anchorage.

Fearing re-imposition of customs duty and sales tax in the new budget importers are trying hard to bring in as many vessels as they can before the end of current fiscal year on June 30.

Ali Sher Behan, Additional Collector Customs at Gadani, talking to Dawn in his office said that the number of vessels at the ship-breaking yard is expected to cross 100 before the end of current fiscal.

He said that removal of customs duty and sales tax had helped revive the ship-breaking industry after a lull of over eight to 10 years.

Giving details of revenue collection Behan said that as there was no customs duty, which generally ranged between 1 to 25 per cent and sales tax at 16 per cent, the national exchequer has collected Rs129.055 million only on 70 ships which have already beached the yard. He said this collection is on account of 1 per cent income tax (withholding tax) at import stage.

However, he said, there is nominal collection of customs duty, sales tax and federal excise duty on those items, which are not part of the vessel but are loaded as leftovers.

Full activity at Gadani generates economic activity in a big way and creates employment opportunities from seashores of Balochistan to up North where most of the foundries and re-rolling mills are located,” the collector observed.

He further said that 80 per cent of ship scrap and plates found their way to the Punjab where most of engineering industry is located and there is huge demand for quality steel.

Due to brisk ship dismantling activity presently around 10,000 to 12,000 workers, mostly from NWFP, are working in the scorching heat and under highly hostile environment where no worth mentioning basic facilities are available.

Chaudhry Abdul Majeed is one of the pioneers of ship breaking industry and entered this business about 35 years back. Talking to Dawn at his plots No111 to 114 said that initially small vessels of 3,500 LDT (long displacement tonnage) were imported for scrapping.

There was a time when there were few ship breaking plots but today these have increased to 127, which are fully operating and another five plots are under development, he added.

Chaudhry said 35 years ago the ship-breaking was done manually starting from cutting, moving ship plates up for loading on trucks. For moving down heavy equipments from a ship with an average height of 60 feet a trolley fixed on wire rope was used. On an average it used to take three years for dismantling one ship but today with all sorts of equipments like cranes, cutters, lifters etc one ship is dismantled within two to three months, he maintained.

He said the present boom at the Gadani ship-breaking yard began early this year after customs duty and sales was waived in the last budget. Presently, ships being dismantled are bulk carriers as they are cheaper than oil tankers in the world market.

However, he looked a bit wary about the future of the ship-breaking industry in view of falling rates of ship plates and scrap. Chaudhry Majeed said the situation prevailing in the country was causing damage to trade and industry as there was a lesser off-take of steel from re-rolling mills.

He further said there were strong rumours that the federal government in forthcoming budget may impose customs duty and sales tax under strong pressure from importers of shredded scrap from Dubai and Singapore.

It would be unfortunate, he said, if the government falls under their trap because their activity does not create jobs nor it gives any benefit to the people of far-flung areas such as Gadani.