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Webuye's Pan Paper Mills finally set to roll back to life in a fortnight

NEWS
By Standard Reporter | November 28th 2016
By Standard Reporter | November 28th 2016
NEWS

Pan Paper Mills will reopen on December 15, State House has announced.

State House Spokesperson Manoah Esipisu yesterday said President Uhuru Kenyatta will preside over the factory’s formal reopening in Webuye.

On April 28, receivers of Pan Paper reached an agreement to sell the firm to a local investor, paving the way for its revival after years of in activity.

Mr Esipisu said the buyer - Tarlochan Ltd, a subsidiary of Rai Group of Companies - plans to inject an additional $100 million (Sh10 billion) over and above the purchase price of Sh900 million over the next five years.

The funds will go towards rehabilitation of the machines to ensure that the plant operates at full capacity.

The company also owns Raiply Timber Company, West Kenya Sugar Company and Menengai Oil Refinery Company.

“The President did an extensive tour of the factory last week and was overall impressed by the progress so far,” said Mr Esipisu in a statement from Sagana State Lodge.

“Substantial progress has been made towards the completion of rehabilitation works and reopening of the factory, the heart and soul of Webuye town.”

He said some of the milestones achieved include securing the title for the factory, including areas set out for expansion, approval of the sale transaction by the Competition Authority of Kenya as well as assignment of leases to the buyer.

“The purchaser is putting in place various measures to prepare the factory for its reopening. These include the rehabilitation of the powering system and reconnection of the factory by Kenya Power to the electricity grid and reconnection of water supply from River Nzoia - two critical inputs into the paper processing,” he added.

Mr Esipisu said President Kenyatta will open the first line in the factory, with others due to roar into life thereafter.

CHANGED FORTUNES

The factory has already recalled over 1,000 former workers ahead of its reopening. Until 2009, Webuye was a vibrant town with busy restaurants, shopping malls, sports stadiums and a large middle-class population whose purchasing power helped many businesses thrive.

Since the turbines at the paper mill went silent, the town’s fortunes declined. Restaurants shut down and thousands of workers who used to work at the pulp compressing machines left.

Many retailers relocated their shops to the neighbouring Bungoma, Kakamega, Kitale and Eldoret towns. Electricity and water have been reconnected, and at least two machines and a boiler are ready to roar back to life.

The factory has purchased 700 metric tonnes of pulp for processing in the next three months. Traders in the area are optimistic that the reopening of the factory will breathe life back into their businesses.

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

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