Ship breaking industry, struggling due to disruptions in importing scrap ships amid the dollar crisis, resumed imports at a limited scale three to four months ago.
However, a change in the industry’s category under the Environment Protection Rules has led to delays and losses.
The changes, implemented in March this year, made a second round of environmental clearance mandatory for every ship to be broken down. Previously, the required clearance could be obtained within 48 hours.
Industry insiders estimate that they are incurring losses of Tk 6-7 lakh per day for each ship, as they had imported these ships with bank loans.
According to the Bangladesh Shipbreakers and Recyclers Association, around 42 scrap ships worth Tk 6,000 crore have been stuck on yards for the last three months due to the lack of environmental clearance.
This is causing financial losses and leading to a shortage of scrap supplies for steel mills and a labor crisis.
Abu Taher, President of the association, told The Business Standard that the shipbreaking industry has been stagnant for the past year due to decreased raw material imports amid the dollar crisis.
The prolonged waiting time for environmental clearance has created a new problem for entrepreneurs. They are incurring Tk 2.5 crore in bank interests every day against the stuck ships, and workers’ wages are being paid without work. Skilled workers have also left the yards, which poses further challenges.
The delays in obtaining environmental clearance have been attributed to the new version of the Environment Protection Rules provision that requires a second round of clearance from the Ministry of Environment, Forest, and Climate Change headquarters.
These approval meetings are held every 21 days, and if a ship fails to receive clearance in the first meeting, it gets stuck for subsequent meetings.
The shipbreaking industry in Chattogram was initially categorized as ‘orange-b’ in 1997, then changed to ‘red’ in 2007, and reclassified as ‘orange-b’ in 2020.
State Minister for Environment, Forest, and Climate Change Habibun Nahar emphasized the need for scrutiny and inspection of ships before granting clearance, as shipbreaking yards are known to pollute the environment.
The crisis in the shipbreaking industry is also affecting the country’s steel mills, which collect around 50% of their raw materials from shipbreakers.
The shortage of scrap ships has disrupted the supply chain of raw materials for steelmakers, leading to a rise in rod prices.
Steel factories in Chattogram have been particularly affected, with 43 out of 50 factories closing operations in the last three years due to an inability to adjust selling prices with production costs.
The remaining factories have reduced production to 40% to survive amidst the shortage of scraps and fuel price hikes.
Shipbreaking workers have voiced their concerns by forming a human chain in Sitakundu, Chattogram, demanding an immediate solution to the crisis. They are losing their jobs due to halts in ship-cutting activities caused by delays in environmental clearance.
