In her Budget speech on Monday, Union Finance Minister Nirmala Sitharaman spoke about doubling the ship recycling capacity by 2024 and attracting more ships to India from Europe and Japan.
A look at the existing capacity utilisation at one of the world’s biggest ship recycling yards in Gujarat and what the Budget announcement means for Alang, which is planning to add 15 new plots to its existing capacity.
What is the existing ship recycling capacity at Alang? How has it performed in the last decade?
Alang has 153 plots or ship-breaking yards developed on a 10-kilometer long coast in Bhavnagar district. Only 131 plots have been allotted for ship-breaking activities and just 80 plots have ships for breaking, say shipbreakers. So, at present 48 per cent of the existing ship-breaking capacity at Alang is lying idle.
In the year 2011-12, a record 415 ships with a total 3.85 million Light Displacement Tonnage (LDT or weight of a vessel without fuel, cargo, etc) had come to Alang. This was the only year when the Alang ship-breaking had come close to its full capacity of 4.5 million LDT. Thereafter, there has been a steady decline in the number of ships coming for dismantling. In 2019-2020, only 202 ships with 1.62 million LDT came. During the current year (till January 2021), 199 ships with 1.8 million LDT have come, which is a marginal improvement over last year’s figures.
“We will be adding another 15 plots at Mathavda village neighbouring Alang. These are bigger plots measuring 100*100 meters. Once HKC compliance is achieved, the potential of getting more ships increases and hence recycling capacity also increases,” says Avantika Singh, vice-chairperson and chief executive officer of GMB that manages ship recycling at Alang told The Indian Express.
Most of the ships that come to Alang are registered in countries that are considered tax havens like Panama, Barbados, St Kitts & Nevis, etc. “Ship owners in European Union own 35 per cent of the merchant vessels of the world. Similarly, Japanese also have a large fleet. There are ship owners from UAE and Russia too. We get ships from different parts of the world. However, in the past, most of the Owners in the EU and Japan did not sell the ageing ships to us as our yards did not follow the required standards,” said Haresh Parmar, honorary secretary of Ship Recycling Industries Association (SRIA).
Where do ships from EU and Japan usually go for dismantling?
Both European Union and Japan adhere to strict norms related to dismantling of ageing ships. “There are many EU ship owners who want us in Alang to have an EU complaint yard. It is difficult for us (to follow all EU norms) as the EU wants to monitor our ancillary industry,” said Parmar, who is also a shipbreaker at Alang.
Insiders in Gujarat Maritime Board (GMB), which currently manages all operations at Alang, say EU norms require categorisation and tracking of every pollutant from the ship, till it is safely disposed of. “EU wants a record of every pollutant on the ship. They want these pollutants to be documented and disposed of safely. Currently, ship recyclers at Alang do not do regular follow ups with authorised agencies who have asked to dispose of the pollutant. Surveyors from EU have been visiting Alang for the last six years, but nothing concrete has happened so far,” a former official from GMB added.
Most of the ships from the EU go to Turkey where ship-breaking yards are compliant with EU norms. The EU also sends its old vessels to five such yards in Norway and two in Denmark. EU Ship Recycling Regulation require all large seagoing vessels sailing under an EU member state flag to use an approved ship recycling facility. Now the union has strict norms on reflagging (change of flag) ships before they are sold as scrap.
Shipbreakers at Alang feel that as more and more shipbreakers adhere to the centre’s guidelines and get HKC certification, more ships are expected to come to Alang. India hopes that its recent accession to Hong Kong International Convention (HKC) for the safe and environmentally sound recycling of ships in 2019 will help the country attract more ageing vessels. The provisions of HKC have also been included in the new Recycling of Ships Act, 2019.
“Currently 90 yards are HKC compliant. Once we get this certification, a number of Japanese and European owners will be open to selling their ships to India. Our government has already accepted the Hong Kong Convention and is now trying its level best to talk to EU. So we expect the number of vessels to increase in the next few years. Secondly, the government can also increase the number of plots to increase the Shipbreaking capacity at Alang,” said Parmar of SRIA.
“Japanese are now ready to send their ships to Alang because many plots are compliant with Class NK certification. About 40 plots have this certification,” he added.
GMB is also upgrading its existing healthcare infrastructure to conform to EU standards. “We are adding CT scan, MRI, trauma centre, which EU also desires as per their norms. We are going to upgrade the multi-speciality hospital at a cost of Rs 8.4 crores,” Singh from GMB said.