Pan Paper Mills to be handed over to new owner

Investor says he has an immediate plan to pump in Sh6 billion to revive the plant

Pan Paper Mills in Webuye, Bungoma County. FILE PHOTO |  NATION MEDIA GROUP

In Summary

• The government will help the investor with acquisition of licences for easy access to logs and other statutory requirements.
• Pan Paper is said to have closed as a result of accumulated power bills which had accrued to Sh150 million by 2010.
• The firm was sold to the Rai Group for Sh900 million.

Pan Paper Mills receiver manager is expected to hand over the collapsed factory to Rai Group, opening a new chapter for the revival of the firm that was once the lifeline of Webuye town.

The investor says he has an immediate plan to pump in Sh6 billion to revive the plant and create employment to workers who were sacked when the factory went under nearly a decade ago.

Rai Group chairman Jaswant Rai said in an interview that their focus, as part of the turn-around plan, is to bring the factory back to working condition with the first of the four lines expected to start production on August 30.

“What we are aiming at now is to embark on an immediate plan of acquiring machines and carrying out necessary repairs to jump-start the process of production within three months,” said Mr Rai.

Mr Rai noted that it would take a while before some of the equipment are installed as they have to be imported. “We are going to replace almost everything because the plant, in its current state, cannot work effectively,” he said.

The government, which facilitated the sale of the once giant mill, will help the investor with acquisition of licences for easy access to logs and other statutory requirements.

“Our role as a government in all this process was to facilitate the transfer to an investor but the sale was handled by a receiver manager on behalf of the lenders. However, we will ensure that we create a conducive environment for the investor,” said Industrialisation Secretary Adan Mohamed.

Mr Rai said that protection of local industries is key to job creation and growth of the country’s economy.

The investor said he had plans for value addition to ensure the business makes maximum returns.

The investor plans to put up a power plant that will use the firm’s by-products to make the company energy sufficient and cut down on cost of production.

Pan Paper is said to have closed as a result of accumulated power bills which had accrued to Sh150 million by 2010.

The firm was sold to the Rai Group for Sh900 million.

The government had tried twice to revive the collapsed mill in vain, pumping close to Sh3 billion.

Mr Herman Kasili, chairman of the National Chamber of Commerce and Industry, Webuye branch, says the move by the government to bring on board a private investor is welcome.

The investment is expected to yield close to 1,500 jobs in Bungoma and Western Kenya within the next three years.

Mr Mohamed sought to allay concerns that the plant may close again due to challenges in getting raw materials.

“Other than working with the Kenya Forestry Service, they have the option of importing semi-processed pulp,” he said.

Recycled paper, which is readily available locally, will also be a key source of raw material.