Paper mill recovery hinges on cheaper energy

Raw materials

It was not clear whether the ownership structure will change, because the government owned 34 per cent of the company before it was put under receivership by its short term shareholders.

Treasury has released Sh190 million and has made further commitments to release Sh310 million within the next two weeks.

This will enable the company’s mill number three that deals with waste paper to reopen.

President Kibaki was speaking at his Harambee House office during a meeting with leaders from Western Province and officials of the Ministries of Finance and Industrialisation organised to discuss the revival of the factory.

The Kenya Power and Lighting Company has restored electricity to the factory after the government paid an outstanding bill of Sh80 million.

The President challenged the new factory management to seek ways of applying advanced technologies that would make the company produce products at competitive prices.

Pan Paper closed down in January last year when the management abandoned the plant over debts totalling Sh8.1 billion.

The government then secured the company and appointed experts in September, last year, who recalled workers to clean the factory in preparation for its reopening.

Long-term lenders wanted the government to indemnify them of the accrued debts before reopening the plant.

But Industrialisation minister Henry Kosgey said the demands were unrealistic.

The minister said the solution lay in the government agreeing with the concerned parties on a joint receivership and sale of the company to a new investor.

The company’s majority shareholder, Birla Group of India (54.3 per cent) has since left the country after the company failed.