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Corporate News

Pan Paper seeks Sh6 billion to jumpstart struggling miller

Governor Kenneth Lusaka. PHOTO | PHOEBE OKALL
Governor Kenneth Lusaka. PHOTO | PHOEBE OKALL 

Webuye-based Rai Paper, formerly Pan Paper Mills, requires about Sh6 billion before it becomes fully operational after it was bought by new investors.

Most of the money will be used to rehabilitate and replace aging machines within the next six years, according to Rai Group of Companies chairman Jaswant Rai.

They have since pumped about Sh24 million for renovation, which has seen some of the obsolete machines replaced to facilitate early production process.

“So far, only one line out of four lines is working and it will take about two years for the mill to regain full capacity.

Most of the machines have to be replaced,” said Naga Shankar, factory manager yesterday.

He disclosed that the operational line was for brown paper from recycled paper and that production of paper from wood will resume after completion of the other three lines.

“We are now producing brown paper estimated at 50 to 60 tonnes per day used in the packing industry,” explained Mr Shankar while admitting that they were experiencing challenges in the revival of the company.

“We had some quality problems, but we have rectified all of them. The roofing sheet was completely damaged. We are removing asbestos and replacing with metal sheeting,” he added .

A number of employees were busy at the production unit while others were working on the pipe transporting water from River Nzoia to the factory during a spot check by the Business Daily.

A plumber who sought anonymity said that the factory was not working on daily basis owing to the repairs of the water pipes . “The factory is only operational for two to three days a week with the rest of the days repairs being done. Most of the metallic parts were consumed by rust,” he said.

Bungoma governor Kenneth Lusaka said full operation of the mill was key to improving the economy of Western Kenya.

“The reopening of the company will awaken the Western region’s massive economic potential, creating job opportunities,” said Mr Lusaka, adding that the county government will ensure that it offers the necessary support to the new investors.

The economy of Western Kenya suffered a major blow after the giant company was placed under receivership over 10 years ago.

Tarlochan Limited, a subsidiary of Rai Group of Companies, took over the company following the signing of sale and purchase agreements with receiver managers. The Rai Group bought the struggling miller at Sh900 million,which leaders from the region claim was undervalued and want the deal to be reviewed afresh.

bbii@ke.nationmedia.com

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