Pakistan’s shipbreaking yard at Gadani may be severely hit by the new European Union ship recycling regulations.

It is also facing tough competition from China and Turkey which
receive maximum number of ships for recycling because of their advanced
setups for dismantling.

At present, 68 plots are operational in the Gadani shipbreaking yard,
which are run by 38 operators and employ more than 12,000 workers. In
the year 2012, the yard had 133 ships to dismantle.

These facts were revealed in a research report, ‘Pakistan
shipbreaking Outlook: The Way Forward for a Green Ship-recycling
Industry’. The research was jointly
conducted by Islamabad-based Sustainable Development Policy Institute
(SDPI)
and Brussels-based Non-Governmental Organisation Shipbreaking Platform.

The report alerts Islamabad to take corrective measures to save the
industry, which also provides raw materials to the domestic steel
industry, from a complete collapse. The new EU regulations strongly
discourage its citizens from breaking ships at beaches of those
countries that do not have advanced methods for dismantling.

The findings of the report are based on the physical observation of
shipbreaking yards, unsatisfactory workers rights, waste handling,
storage, disposal and environmental impact. All these issues will turn
out to be major irritants in the attraction of ships for breaking at
Gadani, especially from Europe, in case the government does not take
corrective measures.

To comply with these standards, Patrizia Heidegger, a co-author of
the report, suggested that Pakistan introduce standard operating
procedures (SOPs) to deal with hazardous waste.

Thousands of tonnes of hazardous waste are piling up in the Gadani
area. There is an urgent need to put in place facilities to take care of
this waste, which endangers the environment and threatens the health of
workers.

Ms Patrizia quoted an example from different shipbreaking nations
like China and India, which, she said, should be considered in
formulating rules and regulations for shipbreaking in the country, which
was only recently formally recognised as an industry. Unfortunately,
much of the documentation is still non-existent.

In this context, Pakistan has ratified the Basel Convention. However,
a compliance instrument is yet to be established. Furthermore, the
enforcement of laws like the Pakistan Environment Protection Act 1997,
the Factories Act 1934 and the Pakistan Penal Code, which are already in
place, is very weak.

With Pakistan, the issue is not with the formulation of new rules,
but the implementation of existing rules to comply with the EU’s
standards to save shipbreaking from complete collapse. The industry pays
around Rs5 billion in taxes annually.

The report made 20 recommendations for a green ship recycling
strategy and sector-specific regulations. As the investment needed for
compliance with international standards is beyond the financial capacity
of the local shipbreaking industry, development banks or the Global
Environment Facility (GEF) could assist Pakistan in the upgrading of its
shipbreaking yards.

After the 18th amendment, the government needs to remove the
overlapping responsibilities between the national and provincial
governments, and ensure the implementation of the regulations. The
recommendations vary from training and awareness to a roadmap for
investment in the technical infrastructure of the shipbreaking yards.

The report also recommends that the State Bank of Pakistan issue a
directive to commercial banks for compliance with social and
environmental safeguard policies and legislation with regards to loans
given to the shipbreaking sector.

In short, the establishment of state of the art infrastructure at Gadani will attract more ships for dismantling in the future.