Outmoded machines delay Pan Paper comeback

The reopening of the Pan Paper Mills will take a while longer after the new investors encountered deeper troubles at the mill.

Sold to the Rai Group in April for Sh900 million, the Webuye based paper mill was expected to be reopened by August.

The new investor however says the plant was in a far worse condition than initially anticipated with more time needed to ensure the plant runs efficiently once restarted.

Speaking while touring the plant on Friday, Pan Paper Mills Managing Director Y. V Choudray said only one paper mill is operational while all other facilities would have to be grounded and new parts bought before production can start.

“The assets that can be put back to life are the paper machines. The pulping part of the mill has to be grounded and we also need to introduce new technology,” Mr Choudray said.

Pan Paper was shutdown in 2005 under a mountain of debts and inefficiency owing to outdated technology.

The new investor had initially set an August reopen date but extended the period to September to make further repairs.

It would now appear that the scope of work had increased with full modernization of the paper mill needed to make it both competitive and efficient.

Tarlochan Limited, a subsidiary of the Rai Group, plans to invest Sh6 billion over the next five years to bring the plant back to life.

Mr Choudray said the company had hired an international consultant to draw up a long term production plan for the mill.

“An internally reputable pulp and paper consultant has been appointed to draw out the long term road map for the mill. This road map will be executed in several phases with the first phase being to restart production on one mill,” he said.

Pan Paper plans to boost production to 150,000 tons per annum to make the mill commercially viable.

The Rai Group plans to modernize the plant, having successfully turned around South Paper Mills in Tanzania which it bought in 2005.