Ship Recycling in Pakistan: Prospects, Challenges and Way Forward

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Contents

 

AUTHORS’ INFORMATION – SECTION WISE.. x

FOREWORD.. xi

ACKNOWLEDGEMENT. xiii

ACRONYMS.. xiv

IMPORTANT TERMINOLOGIES FOR SHIP RECYCLING SECTOR.. xvi

EXECUTIVE SUMMARY.. xvii

SECTION 1: THE CONTEXT OF THE REPORT. 2

1     INTRODUCTION.. 2

1.1      Background / Rationale. 2

1.2      Problem Statement 5

1.3      Research Questions. 6

1.4      Aim and Objectives. 7

1.5      Scope of the Study. 7

1.6      Methodological Context 8

1.7      Classification of Key Contents for the Report 8

SECTION 2: ROLE OF SHIP RECYCLING IN PAKISTAN.. 10

2     ROLE OF SHIP RECYCLING TOWARDS SOCIO-ECONOMIC AND INDUSTRIAL DEVELOPMENT IN PAKISTAN.. 10

2.1      General Overview.. 10

2.2      Historical Trends of Ship Recycling at Gadani 11

2.3      Employment Generation by Gadani Ship Recycling Activity. 13

2.3.1       Data sources and types. 13

2.3.2       Datasets for the study. 13

2.3.3       Calculation of Direct Employment in Gadani Ship Recycling Industry. 13

2.3.3.1        Breakdown of direct employment at Gadani Yard. 14

2.3.3.2        Breakdown of total employees in the hotels at Gadani Yard. 14

2.3.3.3        Breakdown of total employees in trucking industry supplying ships steel from Gadani Yard to Karachi 16

2.3.4       Calculation of Indirect Employment associated with Gadani Ship Recycling Industry in Pakistan  17

2.3.4.1        Breakdown of indirect employment in Re-rolling Mills, Transportation and Miscellaneous Steel Stores  17

2.3.4.2        Breakdown of indirect employment in construction and transportation industry. 24

2.3.4.3        Breakdown of indirect employment in smelting and melting mills. 28

2.3.4.4        Breakdown of indirect employment in machinery parts and industrial nits in Pakistan  31

2.3.4.5        Breakdown of employment in wood and agree items. 34

2.3.5       Calculation of Total Employment and Socio-economic Contribution by the Ship Recycling Industry in Pakistan. 35

2.3.5.1        Breakdown of Socio-economic Contribution for Direct Employees associated with Gadani Ship Recycling Industry in Pakistan. 36

2.3.5.2        Breakdown of socio-economic contribution for in-direct employees associated with Gadani Ship Recycling Industry in Pakistan. 38

2.4      The Value Chain Analysis. 42

2.4.1       Overall Summary of Employment and Socio-economic Contribution. 42

2.4.1.1        Overall Summary of Employment 42

2.4.1.2        Overall Summary of Socio-economic Contribution. 46

  1. Breakdown of Direct Employment 51
  2. Gadani Shipbreaking Direct Employees Dependent Population. 52
  3. Breakdown of Indirect Employment 54
  4. Pakistan Re-rolling Mills Indirect Employment 54
  5. Pakistan Re-rolling Mills Indirect Employment Dependent Population. 55

iii.        Construction Industry Indirect Employment 57

  1. Dependent Population on Construction Industry. 58
  2. Smelting and Melting Industry Indirect Employment 59
  3. Dependent Population on Smelting and Melting Industry. 59

vii.       Employment in Machinery Parts and Other Industrial Units. 60

viii.      Machinery Parts and Other Industrial Unit Employment- Industry Indirect Employment Dependent Population. 60

  1. Wood and Agree Items – Indirect Employment 61
  2. Wood and Agree Items Indirect Employment Dependent Population. 62

2.4.2       Tax Revenue Generation by Gadani Ship Recycling Industry. 62

2.4.3       Share of Steel Plates towards Steel Demand, and Market Stabilization and Consumer Protection  64

2.4.4       Consumption Wise Breakdown of Gadani Ship Steel 65

2.5      Conclusions and Recommendations. 68

SECTION 3: SHIP RECYCLING SITE ANALYSIS.. 71

3     ANALYSIS OF GADANI SHIP RECYCLING SITE.. 71

3.1      Ship Recycling Procedure. 71

3.1.1       Beaching Method. 71

3.1.2       Berthing Method. 72

3.1.3       Dry-docking Method. 74

3.1.4       Air bag Method. 74

3.1.5       Slip-way Method. 74

3.1.6       Alongside Parking. 75

3.2      Beaching Method – A Business as Usual case at Gadani 75

3.3      Characteristics of Gadani Beach. 77

3.4      Comparison of Gadani Ship Beaching Method with Practices at Regional and International Yards  78

3.5      Existing Ship Recycling Plots, Ownership and Land Rights at Gadani Yard. 80

3.6      Analysis of Alternatives. 80

3.6.1       Alternative Parking Methods. 80

3.6.2       Comparison of Gadani Beach with other Locations inside Pakistan. 83

3.7      Conclusion and Recommendations. 84

SECTION 4: SHIP RECYCLING PROCESS.. 87

4     SHIP RECYCLING PROCESS AT GADANI YARD.. 87

4.1      Ship Recycling Process at Gadani Yard. 87

4.2      Products and Wastes. 91

4.2.1       Removal of movable articles. 91

4.2.2       Removal of oils and other liquids. 91

4.2.3       Removal of Equipment (reusable) 91

4.2.4       Disposition of Asbestos and PCBs. 91

4.2.5       Surface Cleaning. 92

4.2.6       Cutting of Metal 92

4.2.7       Recycling of Materials. 92

4.2.8       Waste Materials. 92

4.3      Requirement of Social, Environmental and Workplace Safety. 93

4.4      Safety & Health Practices and Environmental Measures at Gadani Yard. 93

4.5      Comparison of Existing Practices at Regional and International Yards. 95

4.6      State of Best Practices for Green Ship Recycling at Gadani Yard. 98

4.7      Relevant Stakeholders. 100

4.7.1       Concerns of Stakeholders. 100

4.8      Conclusion and Recommendations. 102

SECTION 5: DECLINING TRENDS FOR SHIP RECYCLING.. 105

5     DRIVERS OF DECLINING TRENDS FOR SHIP RECYCLING AT GADANI 105

5.1      General Overview.. 105

5.2      Concerns of the Stakeholders. 106

5.3      Impact of Re-rollable Scrap on Value Chain of Ship Plates. 108

5.4      Impact of Various Taxation Regimes. 108

5.5      Impact of Dollar Exchange Rate. 110

5.6      Impact of International Obligations. 111

5.7      Overview of Existing Infrastructure and Facilities at Gadani Yard. 112

5.8      Conclusion and Recommendations. 112

SECTION 6: GOVERNANCE OF GADANI SHIP RECYCLING.. 115

6     GOVERNANCE OF SHIP RECYCLING IN PAKISTAN.. 115

6.1      General Overview.. 115

6.2      Review of Existing Policy, Legal and Institutional Mechanism.. 115

6.2.1       The Baluchistan Ship Breaking Industry Rules, 1979. 115

6.2.2       Occupational Safety and Health in Ship Recycling. 116

6.2.3       Hazardous Waste and Environmental Protection. 117

6.3      Compliance Status. 117

6.4      Institutional Procedures and SOPs in Vogue. 119

6.4.1       Responsible Institutions. 119

6.4.2       Purchase and import of end of life ship. 119

6.4.3       Information to JMICC by Ship’s Agents. 119

6.4.4       Stay at Gadani Anchorage. 120

6.4.5       Beaching at Gadani Yard facility area. 120

6.4.6       Custom Clearance. 120

6.4.7       Bow (Nall/Nose) Cutting. 120

6.4.8       Initial Environmental Examination (IEE) Report 121

6.4.9       Removal of Hazardous Material, Wood and Agree items. 121

6.4.10     Inspection of Tankers by Explosive Department 121

6.4.11     Cutting Operations. 121

6.4.12     Waste Management 122

6.5      Review of Government’s Plan for Development of Infrastructure and Allied Facilities at Gadani Yard  122

6.6      Government’s support towards promotion of ship recycling in Pakistan. 123

6.7      Rationalizing Public Private Partnership for infrastructure facilities. 124

6.8      Conclusion and Recommendations. 126

SECTION 7: INTERNATIONAL OBLIGATIONS.. 129

7     ANALYSIS OF INTERNATIONAL OBLIGATIONS FOR GREEN PRACTICES.. 129

7.1      General Overview.. 129

7.2      International Obligations. 130

7.2.1       Hong Kong Convention (HKC) for the Safe and Environmentally Sound Ships Recycling. 130

7.2.2       Basel Convention. 131

7.2.3       ILO Guidelines. 132

7.2.4       EU Waste Shipment Regulation. 132

7.2.5       EU Ship Recycling Regulation (EU SRR) 132

7.2.6       Inclusion in EU List 133

7.2.7       Preparedness for International Obligations and Green Ship Recycling Operations at Gadani Yard  133

7.3      Requirements under HKC.. 134

7.3.1       Requirements for Ship Owner 135

7.3.2       General Obligations under Article 1. 135

7.3.3       Control Related to Ship Recycling Under Article 4. 135

7.3.4       Surveys and Certification of Ships under Article 5. 135

7.3.5       Exchange of Information Under Article 7. 135

7.3.6       Inventory of Hazardous Materials under Regulation 5. 135

7.3.7       Controls on Ship Recycling Facilities under Regulation 15 of HKC.. 135

7.3.8       Authorization of ship Recycling Facilities under regulation 16 of HKC.. 136

7.3.9       Requirements for Ship Recycling Facility under Regulation 17. 136

7.3.10     Ship Recycling Facility Management Plan under regulation 18. 136

7.3.11     Requirement for Prevention of adverse effects on the human health and environment under regulation 19. 136

7.3.12     Requirement for Safe and Environmentally Sound Management of Hazardous Material under Regulation 20. 136

7.3.13     Requirement for Emergency Preparedness and Response Plan Under Regulation 21  136

7.3.14     Requirement for Work Safety and Training under Regulation 22. 136

7.3.15     Reporting on Incidents, Accidents, Occupational Diseases and Chronic Effects. 137

7.3.16     Requirement for Initial Notification and Reporting Requirements under Regulations 24  137

7.3.17     Status of ratification. 137

7.3.18     Views of Stakeholders regarding HKC Ratification and application at Gadani 138

7.4      Requirements under EU Regulations. 139

7.4.1       Specifications. 139

7.4.2       Requirements for Ship Owners under Article 6. 140

7.4.3       General Requirements. 140

7.4.4       Ship Recycling Facility Management Plan. 141

7.4.5       Infrastructure Requirements. 141

7.4.6       Control of Hazardous material under Article 4. 141

7.4.7       Inventory of Hazardous Material Under Article 5. 141

7.4.8       Requirements for Health Risks and Environment under Article 13(1)(f) 141

7.4.9       Requirement for what is meant by Built Structures for environmental sound ship recycling under Article 13(1)(c). 142

7.4.10     Requirement with Regard to Article 13, Waste Recovery or Disposal Operations under Article 15(5) 142

7.4.11     Requirement for what Constitutes Compliant Record-Keeping On Incident, Accident, Occupational Diseases and Chronic Effects under Article 13(1)(i). 142

7.4.12     Requirement for what Constitutes Appropriate Personal Proactive Equipment under Article 13(1)(i) 143

7.4.13     Requirement for Prevention of Adverse Effect On Human Health under Article 13(1)(f). 143

7.4.14     Requirement for what Constitutes Compliant Record-Keeping On Incident, Accident, Occupational Diseases and Chronic Effects under Article 13(1)(j) 143

7.4.15     Requirement for Obligations with Respect to Training under Article 13(1)(i). 143

7.4.16     Requirement for Emergency preparedness and Response plan under Article 13(1)(h) 144

7.4.17     Issuance and Endorsement of Certification under Article 9. 144

7.4.18     Duration and Validity of Certification under Article 10. 144

7.4.19     Reporting on Incidents, Accidents, Occupational Diseases and Chronic Effects under Article 13(1)(j) 144

7.4.20     Surveys under Article 8. 144

7.4.21     Port State Control under Article 11. 144

7.4.22     Requirement for Management and Monitoring System Article 13(1)(d) 145

7.5      EU Listing. 145

7.5.1       Benefits and Procedure for Certification to EU listing (role and requirements for Independent Verifiers) 145

7.5.2       Status of National, Regional and International Yards in EU Listing. 146

7.5.3       Plans / Views of PSBA Members for EU Listing. 146

7.6      Comparative Analysis of Step Activities at Gadani and Requirements of HKC and EU Regulations for Sustainable Ship Recycling. 149

7.7      FOC and Ship Recycling. 153

7.8      ILO and its Requirements for Ship Recycling. 155

7.8.1       General Requirements. 155

7.8.2       Requirements for Model plan. 156

7.8.3       Safety requirements for tools, machines and equipment 156

7.9      Conclusions and Recommendations. 157

SECTION 8: ACTION PLAN.. 159

8     CONCLUSIONS AND THE WAY FORWARD.. 159

8.1      Findings and Conclusions. 159

8.2      The way forward to Green Ship Recycling in Pakistan. 162

BIBLIOGRAPHY.. 166

Annex-A: Questionnaire for Ship Breaking Workers. 169

Annex-B: Questionnaire for Green Ship Recycling in Pakistan. 172

Annex-C: Questionnaire  for Value Chain Analysis. 174

Annex D: Activity wise Process Flow Matrix of in Vogue for Ship Recycling at Gadani 175

Annex E: Legal and Other Requirement Matrix. 179

Annex F: List of PSBA Members. 196

Annex G: List of Re-rolling Mills in Pakistan. 200