Ray of hope for businesses as Pan Paper Mills reopens

Pan Paper is set to reopen later this month after seven years of struggle. (PHOTO: BENJAMIN SAKWA/ STANDARD)

After seven years of struggle, business people in Webuye town now hope for a better future as Pan Paper Mills reopens this month.

Webuye town was until 2009, a vibrant metropolis with busy restaurants, shopping malls, sports stadia and growing middle class whose purchasing power sustained many businesses.

The closure of the factory signalled an economic disaster for thousands of employees and residents of Webuye Township. From empty shop shelves to deserted rental homes, the impact of the shutdown was devastating.

Since the turbines at the paper mill went silent, the town quickly became a pale shadow of what it used to be. Most restaurants shut down, thousands of people who used to work at the pulp compressing machines lost jobs, as shops and mall owners also relocated to other nearby towns like Bungoma, Kakamega, Kitale and Eldoret.

The once vibrant town slowly turned to a ghost town and for the last seven years, business people continued to count losses terming it hell on earth.

Jothan Katiyi, a wholesale trader at Sango shopping centre next to the factory is one of the businessmen who have counted losses but now he is optimistic that his business will pick up. “I used to sell goods worth Sh30,000 per day but things have changed since the factory collapsed. I hardly sell goods worth Sh10,000 per week,” said Katiyi.

Mr Katiyi is now planning to sell a portion of his land to restock his shop after receiving news that the factory is set to be reopened in the next three months. “The stock I had in the shop helped me to buy the land I have today. I will sell part of it to stock my shop because I am optimistic when the factory reopens I will be able to get more customers,” he said.

Until the factory closed, he could sell 40 crates of loaves of bread per day but his fortunes have dwindled to five crates per day. Caroline Njoki, a grocery trader at Webuye said she expects her business to grow when the factory reopens.

“I am targeting to increase my stock because I am anticipating more customers when the factory reopens,” said Njoki.

Muchai Sango, another businessman in Webuye is planning to apply for a bank loan to buy more stock after learning of the good news that the factory will be revived.

“It is good news for us that the factory will be revived soon. We expect our business to flourish as it used to be,” he said. He said at one point his shop risked closure due to lack of customers as most of his customers were workers at the factory.

To revive hopes of the business community, electricity and water has been reconnected at the factory with tests on some machines ongoing. Already, 200 former workers have been recalled to work at the factory even though on contract basis as they await reopening of the paper mill.

Have since died

Stephen Watiti, the vice chairman of the Kenya Union of Printing, Publishing, Paper Manufacturers and Allied Workers in charge of the workers at the factory confirmed that 200 workers have been recalled.

“They have recalled some of the former workers on a temporary terms. We hope they will hire them on permanent basis. When the factory closed down it had 30,000 employees, although some have since died,” said Watiti.

Rai Group of Companies took over the Sh18 billion worth of assets owned by the factory. When the factory shut down in 2009, the management left behind 838 rental houses for its low cadre staff at National, Chocolate and E-quarter estates.

The management also left self-contained houses, a guest house in Webuye with 40 rooms and 40 VIP houses.

Tens of acres of land under trees that served as raw material, recreational site Pan Paper Stadium and Pan Paper grounds in Lugari are among some of the facilities left behind.

The investor, Tarlochan Limited, a subsidiary of Rai Group of Companies, plans to pump in Sh6 billion to reopen the factory in Webuye. The company bought the factory at Sh900 million from the receiver manager and lenders.

The collapsed factory has been undergoing a four-month rehabilitation, which includes carrying out a total overhaul of obsolete machines such as boilers.

Apart from acquiring Pan Paper the company also owns Raiply Timber Company, West Kenya Sugar Company and Menengai Oil Refinery Company.