After a pause of five years, shipbuilder Western Marine Shipyard Ltd is planning to export eight ships to a buyer of the United Arab Emirates (UAE) by next year. 

It was in January 2020 that the shipbuilder last exported two large bulk carriers to Indian Jindal Steel Works.

It has faced a financial crunch since 2014 for a fall in the global market for shipbuilding and shipping business.

The situation had worsened for the company due to conflicts among its directors and a massive amount of debt accruing with banks and financial institutions following the Covid pandemic.

The shipbuilder is now hoping to make a comeback.

The company signed a deal worth $7.3 million in 2023 with the UAE-based buyer, Marwan Shipping Ltd, for the construction of four landing craft vessels, two tugboats and two oil tankers.

Out of the eight vessels, the shipbuilder has completed building a 69-metre-long landing craft, named Rayan, said Western Marine Managing Director Captain Sohail Hasan.

It will be handed over to the buyer by January, he told a press briefing on the Western Cruise ship anchored at Chattogram Boat Club yesterday.

Of the rest, two high-powered tugboats named Khalid and Ghaya would be exported by April, said Hasan, adding that the remaining five vessels would be delivered gradually within 2025.

"The UAE firm is supplying all the raw materials for building these ships and only paying us the making charges," Captain Hasan told The Daily Star.

"It means the whole of this $7.3 million of foreign currency can be retained within the country as we don't need to purchase anything from abroad," he added.

The MD said in 2017, Western Marine exported a similar landing craft vessel to the same UAE-based buyer.

The return of this buyer in search of a new vessel is a testament to the fact that it is satisfied with ships built in Bangladesh, he said.

Western Marine entered into shipbuilding in 2000 and earned good reputation internationally. But the situation started to turn bad since 2014 following cancellation of several orders from foreign buyers.

In 2008, the shipbuilder signed a €94 million contract with German company Grona Shipping to build 12 ice class cargo vessels.

Only four out of these 12 ships were delivered smoothly at its original price.

Western Marine had to deliver four other ships at a discount, while the German buyer cancelled the order for the remaining four ships, citing global inflation and the eurozone crisis in 2012-2013.

An official of Western Marine said, "During that period shipping freight dropped drastically worldwide and global shipping and shipbuilding business faced a huge crisis which had led our European buyer towards insolvency and order cancellations."

A Danish buyer also cancelled an order for two vessels when those were already half built, he said, adding that they later managed to sell one of those two ships to a company of Equador at a discount.

These order cancellations as well as global market fall in shipping and shipbuilding business led the company to face a financial crunch since 2014.

There was a lack of foreign orders of high value commodity ships during the period from 2013 to 2020, he claimed.

And by this time, the company had gradually been burdened with a huge amount of debt with banks and financial institutions.

Western Marine's loans with different banks and financial institutions reached Tk 1684 crore. Failure to pay those off on time led to the accumulation of interest of Tk 1,402 crore.

The company has so far paid off Tk 952 crore. Its current outstanding loan stands at Tk 2,134 crore.

Western Marine General Manager (Finance) Abul Mansur said they have regularised these loans with most of the financial institutions, while negotiations were ongoing with the rest.

They availed a grace period of two years from most of the financial institutions making required down payments.

Managing Director Hasan said though devastated with debts, they did not give up, rather tried to survive through the export of small support ships to a few African countries, India and other countries from 2013 to 2023.

"Moreover, we built some fishing vessels and inland utility vessels for government bodies of Bangladesh and some individuals worth around Tk 500 crore during the same time period," he said.

He said Bangladesh Bank in 2022 formed a Tk 2,000 crore refinance scheme to ensure sustainable development of the shipping industry, but no company could get money from that fund due to different complications.

He urged the government to create such a fund and to provide loans from that fund at low interest rates to help the sector in staying afloat.