Financial Express – EU parliament accepts proposal for penalty on bloc’s ship owners

3 April 2013 - The European Union (EU) has long been striving for improvement in the working condition in the ship-breaking yards in Bangladesh and other South Asian countries. Besides, it is also trying to enforce measures to address environmental concerns in the ship-breaking yards of these countries, where scrapped ships are dismantled regularly.

To improve the working condition in the South Asian ship-breaking yards, the European Parliament has accepted a proposal to impose penalties on EU ship owners, who dispose of scrap vessels for dismantling in the developing world.

The proposal, if approved, will help in the cleaning up of old ships and ensure that the materials are recycled in EU-approved facilities in line with the ‘polluter pays’ principle, says a recent news release of the European Parliament.

If the step of the EU becomes successful, the European shippers may have to pay 3.0 cent per tonne freighted into a special fund once they dock at EU harbours.

In the case of a 100,000 tonne shipment requiring a 3,000 euro fee, the amount will flow into the ship-breaking yards in Southeast Asia. It is a kind of disposal tax, which is intended to improve working condition and environmental standards.

With this system of making payments for the special fund, the EU now wants to see European shipping companies take on more responsibility for disposal of the vessels.

Currently, European shipping companies are entitled to sell eight-year-old operational ships to the shipping companies in non-EU countries, which after many years send those to the ship-breaking yards, when the vessels become obsolete.

Under the current scheme, the cost for the exercise is borne by the most recent owner, rather than the first one, the news release said.

However, the European shipping firms are yet to agree to share the cost for mitigating the hazards being faced during ship scrapping.

But persuasion is continuing and the ship owners are likely to comply, the news release added.

Most scrapped ships of the European countries are dismantled in ship-breaking yards on the coastal lines of Bangladesh, India and Pakistan, where working condition and environmental safety measures are bleak.

The ship-breaking yard of Bangladesh has become the world’s largest ship scrapping yard over the last forty years, and now it accommodates more than 100 scrap firms, which engage more than 150,000 workers along a patch of some seven-kilometre-long (4.3 miles) beach near the country’s main port city of Chittagong.

Around 40 per cent of the ocean going scrap vessels and tankers of the world are dismantled at the ship-breaking yard of Bangladesh each year.

However, Bangladesh remained the world’s second-largest ship-breaker after Pakistan, while India slid to the third position in the 2012 calendar year, scrap-yard sources said.

Bangladesh dismantled about 260 ships weighing a total of 3.1 million tones, nearly half the share of Pakistan that tore down more than 500 ships with the dead-weight tonnage of 6.0 million tonnes.

India, which was the largest ship breaker of the world in 2010 and 2011, broke more than 160 ships weighing 1.9 million tonnes in 2012, the industry officials said.

India overtook Bangladesh in the ship-breaking sector in 2010 and 2011 due to imposition of a ban on the sector by the Bangladesh High Court on the ground of environmental and workers’ safety concerns, according to officials at the Bangladesh Ship Breakers Association (BSBA).

But according to officials at the BSBA, by dismantling 260 ships, only 2.9 million tonnes of recyclable steel plates were retrieved.

Bangladesh, which has no iron ore, solely depends on the ship-breaking sector to feed its nearly 1,000 steel re-rolling mills across the country.

Besides steel plates, different accessories ranging from electrical appliances to sanitary and plumbing materials and household items including furniture and utensils etc are made from the scrapped ship materials.