Bangalore: Under pressure from the country’s apex court to ensure a safe and environment-friendly ship recycling facility at Alang in Gujarat, the state government is banking on a special purpose vehicle (SPV) to revive the world’s biggest ship breaking yard and make it cleaner.
The SPV will take on the task of restoring the Alang yard to its earlier status as the world’s top ship-breaker. It will develop and operate the facility in a private-public partnership.
Infrastructure issues: Alang ship-breaking yard in Gujurat. The Supreme Court last year had asked the state government to modernize the yard.
Currently, ship-breaking at these yards is monitored by the Gujarat Maritime Board (GMB), the state regulator that is also vested with developing infrastructure through private investments. The SPV seeks to separate GMB’s regulatory functions from its commercial activities.
“We want to make the yard more productive, independent and professional,” said Atul Sharma, environment engineer, GMB. “We want to convert this into a separate entity through an SPV, which will oversee the operations of the yard instead of the GMB.”
The regulator has hired environmental consultancy firm IL&FS Ecosmart Ltd, a unit of IL&FS Ltd, to prepare a master plan for the Alang shipyard, to be submitted in six months.
The Gujarat government and a private firm, to be selected through a tendering process, will hold stakes in the SPV, Sharma said. The quantum of equity will be decided based on the IL&FS Ecosmart report.
Alang’s 173 plots are auctioned to private ship-breakers who pay development charges, plot rent, ship-recycling charges and port dues, which fetch the Gujarat government annual revenues of Rs16-17 crore.
The Supreme Court last year had asked the state government to modernize and improve the yard’s infrastructure to make it more environment-friendly and safe for workers. It set up a seven-member inter-ministerial committee to implement the court’s order.
About 30,000 people are employed at the Alang shipyard.
The inter-ministerial panel, in its latest meeting on 28 March, asked the Gujarat government to discontinue small plots of 30m, according to a member who did not want to be identified.
Of the 173 plots at Alang, about 100 are of 30mX45m dimension. “In a 30mX45m plot, it is impossible to have all the infrastructure and facilities required for carrying out environment-friendly and worker-safe ship-breaking activity as decreed by the Supreme Court,” said an official at the Iron, Steel, Scrap and Ship-breakers association of India (Isssai). He did not want to be named because of the sensitive nature of the issue. The association is a member of the inter-ministerial committee, which includes representatives from the Union ministries of steel, shipping, and labour, GMB and the Gujarat Pollution Control Board.
From being the world’s top ship-breaker about 10 years ago, Alang has lost ground to Bangladesh due to taxation and regulatory reasons.
With no virgin steel production of its own and resultant higher steel prices locally, Bangladesh can afford to offer higher prices for dismantling time-expired ships.
“We are not economically viable compared to Bangladesh, which is expected to scrap ships equivalent to about 1.5 million tonnes (mt) this year,” said an official at Isssai. “We have to improve the quality and working of our yards so that the international community is forced to sell ships to India.”
At its peak in the late 1990s, Alang had about 300 ships arriving for scrapping. Currently, about 40-45 ships are in breaking position at the yard, which will result in scrapping of just about 0.5mt in 2008-09.
In 1995-96, ship scrapping at Alang had touched 3.03mt.