Gujarat govt to restore Alang’s top ship recycling yard status

The state government is banking on a special purpose vehicle to revive the world’s biggest ship-breaker

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.

Infrastructure issues: Alang ship-breaking yard in Gujurat. The Supreme Court last year had asked the state government to modernize the yard.

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.

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.

Apr 8 2008


Alang ship-breaking yard to go green

April 1st, 2008

Chennai, March 31 (IANS) IL&FS Ecosmart Ltd has signed an agreement with the Gujarat Maritime Board (GMB) to prepare a comprehensive master plan for the Alang ship-breaking yard in Gujarat coast, which will include an environmental management plan. The IL&FS-GMB initiative is expected to result in a development plan that will convert the Alang ship-breaking yard into a “commercially successful” ship recycling yard with “a new benchmark in environmental and social standards”, a release by IL&FS said here Monday.

Last September, the Supreme Court had stipulated stringent environment clearance for the breaking up of old and decommissioned ships at Alang.

The master plan will include the development of a disaster management plan and an environmental management plan to ensure compliance and monitoring of performance of ship-breakers in India.

The plan will also review various aspects including the regulatory framework for ship breaking all along India’s 7,000 km coast and identify infrastructure needs for Alang and introduce recycling to improve the economics of the yard.

The master plan includes development of effluent treatment systems and hazardous waste management to transform Alang into a world-class ship recycling facility.

The plan will emphasise safety and training of workers including upgrading worker health and their housing needs, and also assess the size and growth of the global ship-breaking market and potential market share that Alang could capture.

It is also expected to improve Alang’s competitive advantage, both in terms of the cost of ship breaking and adherence to environmental and social best practices.

Alang will not only be compliant with international performance standards, but also be promoted as a “Green Recycling Facility” that uses higher end technologies and state-of-the-art infrastructure, IL&FS said.

A key outcome of this plan will be the formation of a special purpose vehicle to develop, maintain and operate the Alang ship-breaking yard on public private partnership basis.

There are over 50 ships at the Alang shipyard, awaiting breaking permission. At present, ships are allowed to anchor off Alang, without certification but for breaking up, environment clearance is needed.

IL&FS is a wholly owned subsidiary of Infrastructure Leasing and Financial Services Ltd.


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