Shipbuilding industry suffers due to govt’s lack of interest

Shipbuilding is an attractive industry. Shipyards create quality jobs and support economic growth. Shipyard activities include ship construction, repair, conversion, and alteration. They also include the production of prefabricated ship and barge sections, and other specialized services.

Karachi Shipyard and Engineering Works Ltd is the only high tech shipyard in Pakistan. KS&EW primarily sustained through government subsidies and orders from the Pakistan Navy. Government of Pakistan’s lack of interest in this sector makes the situation worse. In 2014, government decided to set up two new shipyards at Gwadar and Port Qasim, with investments from Japanese and Korean firms on build, operate and transfer (BOT) basis. But since then, the only good news was given by Rana Tanveer Hussain, Minister for Defense Production, on 6 October 2015 that summary of Gwadar shipyard is waiting for Prime Minister’s approval. Not yet approved. It takes five years for a shipyard to be completed.

In 2015, China and Pakistan signed an agreement of 6 Maritime Patrol Vessels (MPV) for the Pakistan Maritime Security Agency. According to the agreement, construction of ships will be undertaken at Karachi Shipyards & Engineering Works (KS&EW) or builder’s shipyard, as commercially viable.

This year, steel cutting of first MPV was held at Gouangzhou Wenchong Shipyard on 29th January. Due to high cost production, KS&EW lost the construction of 4 ships. Just because of Transfer of Technology agreement this year KS&EW will construct only 2 ships out of 6. According to the planning commission (PCI), unit price of each 600T MPV is USD 22.5 million at KS&EW which is $ 4.5 Million more than builder’s shipyard. KS&EW has to be competitive, either in terms of production costs or in terms of technological sophistication. Government should answer why KS&EW lost 4 ships and reasons of high cost. Cost of production in Pakistan is low but government’s mismanagement and poor governance is making it high.

Pakistan shipbuilding industry needs more shipyards. Its importance becomes more when under-construction ship lift and transfer system at KS&EW was stalled due to filing of case in High Court and Supreme Court by the unsuccessful bidder. After receipt of Supreme Court verdict in KS&EW favour, the project progress has recommenced and the contract for civil works has been awarded on 10 January, 2014.

Government should take shipbuilding sector seriously. It’s not just about signing some contracts and building few vessels under transfer of technology. Government’s claims to have achieved self-sufficiency in warship construction appear meaningless when we see this fact that KS&EW can certainly not construct warships through purely indigenous means. Such constructions rely massively on foreign suppliers for almost all the equipment, weapons, sensors, machinery, electronics and even shipbuilding designs and material.

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