The power minister has voiced concerns over the Economic Coordination Committee (ECC) for not consulting the Power Division while collecting data on shipbreaking and recycling sector electricity usage for tariff decisions. The ECC recently discussed declaring the shipbreaking and recycling sector an official industry and instructed the Maritime Affairs Division to work with the Power Division on electricity consumption data. However, the power minister stressed that this crucial step was skipped, raising questions about the accuracy of the figures used.
The Ministry of Maritime Affairs recalled that Gaddani in Balochistan was once the world’s third-largest ship recycling hub. Despite its scale, the sector has long operated informally without official industry recognition, though the Balochistan Development Authority has granted it such status locally. Federal authorities have been urged to formalise this recognition to improve regulation, worker safety, and environmental compliance. This move would also strengthen Pakistan’s position in the global ship recycling market.
The ministry highlighted that the Federal Board of Revenue, acting on the Engineering Development Board’s advice, issued Customs General Order No 04/2022 to offer tax exemptions on certain locally produced goods. The Pakistan Ship Breakers Association is the only entity producing re-rollable and re-meltable scrap in the country. The sector employs up to 24,000 workers directly at Gaddani and provides indirect work to many more, especially women in nearby areas.
Furthermore, the re-rollable scrap from ship recycling is essential for producing construction bars and supplying hundreds of cottage industries with material for tools and hardware. The re-meltable scrap, commonly known as HMS 1&2, feeds steel melting furnaces nationwide, enabling the production of ingots, billets, and re-bars. These materials are vital for Pakistan’s construction and manufacturing industries, making the sector strategically important for economic growth.
In November 2023, Pakistan joined the Hong Kong Convention, which ensures ships are recycled without harming workers or the environment. The convention, effective from June 25, 2025, requires the establishment of safe recycling facilities and proper hazardous waste management. Declaring ship recycling an official industry is seen as a necessary step to meet these international commitments within the given timeframe.
The Ministry of Industries and Production confirmed there is no strict legal rule for declaring a sector an industry, but precedent supports such recognition through ECC approval. Following stakeholder consultation, including input from commerce and finance ministries and the FBR, the ECC approved the proposal to declare the shipbreaking and recycling sector an official industry. This decision is expected to boost local scrap production, create jobs, and align Pakistan with global environmental standards.
