Pakistan has the 3rd largest ship breaking industry in the world. It contributes about Rs.12 billion tax annually to the national exchequer and offers livelihood to 10,000 people directly and 200,000 indirectly.

Due to the unfortunate incident of a fire that broke out on a ship which was being dismantled at Gadani and claimed 28 lives, it needs to be emphasized that the person or company responsible for the fire should be taken to task as per the laws of Pakistan but the entire industry and related industries must not bear the brunt.

The activities in the ship breaking industry were halted as a result and the steel re-rolling mills as well as the construction industry were also severely affected. The prices have soared due to shortage of iron scrap and thousands of people and daily wage labourers have become jobless. Moreover the China Pakistan Economic Corridor (CPEC) projects are now being severely affected. All this is having a negative impact on the economy.

The government initially reacted in two ways. One, it immediately imposed section 144 on the entire ship breaking industry, which brought all activitiesto a standstill and, on the other, it instituted an inquiry committee under a senior naval official and a federal minister to investigate into the causes of the fire.

Now, because of closure of the ship breaking industry, Pakistan is losing immense revenue. More than 100 vessels are dismantled at Gadani every year. Due to closure, vessels are now hesitant in coming to Gadani and are being diverted to other countries in the region, such as Bangladesh, India and China. As a result Pakistan is losing Rs. 1 billion per month in terms of revenue and thousands of people are jobless in the ship breaking, steel re-rolling and construction industries, not just in Karachi or Gadani, but across the country.

Due to the industry`s closure, the banking sector is also facing an imminent crisis, as approximately Rs.25 billion is due to the banks from ship breakers in terms of financing. In these conditions, it is likely that massive defaults will occur. It may be noted that the amount involved is almost equal to the paid up capital of 2 or three banks.

The CPEC projects, which represent $ 46 billion investment in Pakistan and are at the take off stage, have also been affected.CPEC comprises a whole range of developmental activity covering roads bridges, power plants and other industries. All these will be negatively affected and the CPEC projects will be severely hampered.

The price of steel bars has alreadyshotupbyRs.15,000.It was Rs. 55,000 per tonne and is now Rs. 70,000 per tonne, leading to massive escalation in project costs.

The decision to stop ship breaking activities could also affect the pace of progress of CPEC. The ship breaking industry is the base on which many other industries are standing and closure of the industry means closing of a whole chain of economic activity.

The importance of Gadani ship-breaking yard can be assessed from the fact that more than onemillion tonnes of quality steel is salvaged from it every year and much of it is sold domestically. In 2009 2010, a record 107 ships, with a combined displacement tonnage of 852,022 tons, were recycled at Gadani. The yard currently has an annual capacity ofdismantling up to 125 ships of all sizes, including supertankers and very large cargo carriers. About eight to 10 ships per month or a hundred ships per year arrive at Gadani for demolition from all over the world.

The Gadani shipbreaking yard consists of 132 ship breaking units located across a 10 km long beachfront.

People of the business fraternity say that the ship breaking industry plays an important role in reducing import burden for scrap steel in Pakistan, which inturn contributes to the GDP, and provides employment for workers from all over Pakistan, particularly Balochistan, Punjab and KPK. The ship breaking industry is a fully documented sector contributing around 25 per cent to the overall steel requirements of the country whichis approximately four million tonnes.

The ship breaking industry is also involved in a number of welfare activities.

However, there is a need to organize this important industry on more professional lines. It must be equipped to fight with accidental occurrences with full force. The ship breaking yards should have proper medical facilities in the form of hospitals located at a close distance as well as primary first aid facilities to attend to accidents in a timely manner.The existence of a proper road system is also very crucial so that physical connectivity with Karachi and other urban centers in the vicinity is smooth and unobstructed. The roads should be properly lighted and the electricity network should be extended to all the ship breaking yards where the ships are beached. They should also have the facility of gas network and telecom connectivity through a network of towers all along the way.

In this respect, the government must play its due role and contribute to the investment that needs to be made to provide proper medical, road and allied facilities for the ship breaking yards.

It is also hoped that heretofore inconsistent policies of the government for the ship-breaking industry, abrupt changes in duty and other taxes on the irnport of vessels for scrap and, most of all, a general negligence to accord ship breaking the importance that it deserves, are some of the key factors that affect ship breaking activities at Gadani. The benefit of this is taken by other competing countries in the region while Pakistan`s ship breaking industry continues to suffer. At present, industry workers are jobless and the industry is not earning any revenue. It must find ways to move forward in a more organized manner.