Wirana Shipping is calling on Pakistan to give scrap recovered from ship recycling the same tax treatment as imported scrap. The call follows several weeks of efforts by local recyclers to address a tax mechanism that encourages steel mills to buy from overseas.
Under the Federal Board of Revenue’s notification SRO 1245(I)/2026, relevant steelmakers using local scrap face sales tax collection of PKR 30 per unit of electricity consumed. Qualifying manufacturers using more than 70% imported scrap over the preceding 12 months pay PKR 5 per unit, subject to the prescribed reporting requirements. These payments can be adjusted against output sales tax, but the difference in upfront collection can affect mills’ cash flow and their choice of supplier. For ship recyclers, this adds to the difficulty of selling material into an already subdued steel market.
Wirana’s recent weekly outlooks have highlighted the disadvantage facing local recyclers and their discussions with the authorities. Weak demand has left mills reluctant to build stocks, while competition from imported material puts further pressure on local yards. Ship recycling provides Pakistan with ferrous scrap and steel plate, alongside recovered non-ferrous metals. It also supports jobs in the yards and businesses that have served the industry for decades.
Future supplies of European scrap are also uncertain. Tighter EU waste export rules take effect from 21 May 2027, with permitted destinations and waste streams subject to authorisation. The European Commission’s proposed country list remains under consultation.
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Rakesh Khetan, CEO of Wirana Shipping, said: “Pakistan’s ship recyclers supply material its steel industry needs and provide work for businesses well beyond the yards. Yet the current tax arrangements encourage mills to buy imported scrap. We want the government to recognise the value of material recovered within Pakistan and give it equal treatment. As access to overseas scrap becomes less certain, Pakistan has good reason to support the recycling industry it already has.”
Hitesh Vyas, Vice President and Green Recycling Coordinator at Wirana Shipping, added: “The government has begun a PKR 12 billion (approximately USD 43 million) programme to upgrade infrastructure at Gadani. Yet its tax arrangements are putting the very industry that investment is intended to support at a disadvantage.”
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