ISLAMABAD, Nov 11: The national ship breaking industry has raised its serious concern over the smuggling of ‘half Mooa-cut’ pipes through the Taftan border and urged the government to plug the smuggling of the substandard material for the revival of the industry.

The ‘half Mooa-cut’ pipes commonly known as ‘pipe phara’ does not conform to the required standard for construction in terms of its elongation flexibility and strength. About one million tons of such material is being smuggled annually and supplied to the re-rolling mills in Karachi and Lahore, according to the industry.

The ship breakers alleged that the sales tax charged on this material was not based on proper assessment thus incurring loss to the national exchequer. A meeting was held at the Engineering Development Board (EDB) here on Saturday to plan a strategy for revival of the ship breaking industry. It was attended by senior officers of the board and office-bearers of the ship breakers association, an EDB press release said.

The meeting was informed that the ship breaking industry was established in late 70s and it used to break around 200 to 250 ships annually. During 1999, Pakistan ship breaking industry was the third largest in the world.

From early 90's till 1998-99 the breaking tonnage varied from 300,000 to 926,000 LDT, which was reduced to 71,000 LDT in 2005-06. It was observed that Pakistani ship breakers were specialized in breaking large tonnage vessels.

Presently, 5 ship breaking yards are in operation at Gadani. Average investment to set up a ship-breaking yard ranges from Rs35-50 million, the meeting was told.

The meeting noted that the ship breaking activity peaked in 1998-99 with 54 vessels of 926,067 LDT due to low international prices averaging $118-148 per LDT. It dwindled since 2001-02 due to gradual increase in the prices of ship, ranging $118 to 382 LDT.

In spite of the relief in custom duty, sales tax and income tax the industry could not take off. Historically, difference between international prices of shredded scrap and ships for breaking used to be in the range of $10 to 20 LDT, which presently, is in the range of $80-100 LDT. The association also suggested imposition of regularity duty on import of re-rollable scrap from the Taftan border.

It may be recalled that the industry has the capacity to supply one million ton of scrap annually and is providing jobs to 30,000 labourers during its peak period. In addition to this bout 70,000 people were getting indirect employment.

The meeting was informed that technologically, the industry is well advanced as compared to its regional competitors, including Bangladesh and India.