If we are going to sell Webuye-based Pan African Paper Mills to a timber merchant, let us first force them to produce a feasible business plan committing them to reviving the plant within a specific time frame.
From what I gather, Panpaper is just about to be sold to one of the largest timber merchants in East Africa, T.S. Rai Ltd.
Isn’t it just obvious that in seeking to purchase Panpaper, the only value proposition for the timber merchant in the deal is the forest licence from the Kenya Forest Service?
It is foolhardy to put a long-term forest licence into the hands of a timber merchant .Who is going to monitor possible diversion of timber harvested for paper manufacturing to timber business? It is a clear case of conflict of interest.
Until December 2003, Panpaper operated under a 30-year licence, granting it access to subsidised wood stocks from government forests. When the licence expired, the company started operating on one-year rolling licences.
I gather that the Rai Group is now demanding a raft of ‘sweeteners, ’ including a long- term forest licence, before it can put pen to paper on this transaction.
Considering that the ultimate objective is to re-open Panpaper, what is the point of selling these assets to a timber merchant whose prime motive is to access government forests on the cheap?
Does it really make sense to - in the name of reviving the company- grant a private timber merchant a 30-year licence to harvest wood from government forests at subsidised rates?
What do we really want to achieve: a commercially viable company running on a profit basis or a state-controlled entity playing a wider developmental role in the economy of Western Kenya?
We must not forget that in the initial stages, the plan by the government was to buy off the company from long-term lenders and to restructure it and turn it around into a fully-fledged parastatal operating under the Industrialisation ministry.
As a matter of fact, in July 2013, the Treasury and the Office of the Attorney- General even went to the extent of incorporating a new government-owned company by the name Webuye Paper Mills Ltd, which was to take over assets of the company from long-term lenders.
At one stage, the government even set aside Sh900 million for the purpose of paying the company’s long term lenders. But somewhere along the line, the idea was dropped.
I have a suggestion. Instead of selling Panpaper to a timber merchant, let us think outside the box and use the vast land to set up industrial parks and a special economic zone on the land currently occupied by Panpaper.
Webuye town is an attractive location for an industrial park.
You have adequate land, a railway –siding, good road networks and proximity to Kenya’ largest trading partner - Uganda.
When I visit Webuye today, I see the Mekong transboundary special economic zone in Vietnam.
The good thing is that we now have the legal framework for special economic zones.
After nearly eight years of talk, Parliament last year finally passed a law to create not only a new authority to run special economic zones, but a framework for setting incentives for investors, including tax holidays, exemptions from customs and excise duties, and a raft of financial incentives.
We could make Webuye the first transboundary special economic zone in Africa.
We must not forget that the National Environment Management Authority has previously raised concerns about the company’s operations and its pollution of the environment resulting from the pungent smell the plant emits when in operation and the efficacy of water treatment plans.
Concerns were in the past raised by Mount Elgon County Council over the sustainable harvesting of trees from the forest. The government should not sell Panpaper to a timber merchant.
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