Huge concessions beckon new Pan Paper investors

Pan Paper mills in Webuye. The miller collapsed under debt in 2009. FILE 

By GERALD ANDAE,

In Summary

• Easier raw material acquisition process among incentives lined up for buyer.
• But it was not clear whether taxes on imported finished and raw paper would be raised to protect the revived business.

Huge concessions await the buyer of Pan African Paper Mills whose business and assets were put in the market on Friday.

Industrialisation secretary Adan Mohamed said the government would put in order deeds of ownership to the company’s property and secure long-term logging licences for the new investors.

“We will have to acquire the licences for the potential investor to access the raw materials in the forest with ease and we will also have to ensure that all the title-deeds for the land owned by the factory are in order,” Mr Mohamed said.

But it was not clear whether taxes on imported finished and raw paper would be raised to protect the revived business.

Paper converters have been pushing for the protection to be removed because it was cushioning a moribund business, making prices of paper in Kenya uncompetitive in East Africa.

Kenya charges an import duty of 25 per cent on raw paper and 10 per cent on the finished product, making Kenya lose the edge to countries like Tanzania and Egypt.

The Sh40 billion conversion sector wanted the duty to be gradually reduced to the 1996 per cent level of 10 per cent, the rate applied in the Common Market for Eastern and Southern Africa.

In the Business and Assets for Sale notice on Friday, the government invited investors to get an information memorandum from the receiver manager for the mill situated on 169 acreas in Webuye, Bungoma.

(READ: Government changes tack in effort to revive Pan Paper Mills)

The receiver manager John Small was appointed by the government in consultation with debenture holders in August to steer the privatisation of the company.

Muliaro Wafula, who headed a task force appointed by the government in 2011 to advice on the viability of reviving the factory, said easing raw material acquisition would help attract strategic investors because the machines were in good working condition.

“The mills are still working. We ran it for three months as we assessed its potential as members of the task force. I can confidently say it is still a viable project,” said Dr Wafula.

He said three of the four processing mills were in good shape.

“We were able to produce papers of the highest quality during that period and met the required orders,” said Dr Wafula.

The plant produced 100,000 tonnes of fine paper, liner, board, kraft and newsprint per annum at its peak.