Sell Pan Paper or protect its assets – MPs

February 17, 2012
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MPs want the Govt to sell Pan Paper or protect its assets/FILE

, NAIROBI, Kenya, Feb 17 – The Government has been advised to put the Pan African Paper Mills Company under protective receivership or sell it.

In its first report submitted to Parliament, the Committee on Implementation which is charged with monitoring efforts by the government to carry out resolutions of the House, notes that the government’s efforts to revive the factory over the last two years have been ineffective and now want it to take steps to ensure the plant is up and running by March 30 this year.

“In the event that negotiations for a protective receivership were not successful the government to consider working with the long term lenders to facilitate an outright sale of Pan African Paper Mills Webuye to the proposed Webuye Paper Mills Ltd,” the committee says in the report.

The team wants the factory to be placed under protective receivership similar to what was done to the Uchumi Supermarkets.

The committee notes that while the government has been making commitments to revive the factory, the process of negotiating with lenders has taken too long.

The committee also wants the Attorney General to commence ‘interpleader’ proceedings to secure the assets of the company during the period of transition.

“The negotiations have taken too long which is likely to impact negatively on the revival efforts especially taking into consideration the current position of the plant and the uncertainties regarding its legal status,” reads the report.

The factory resumed operations in November 2011 after the government injected Sh1.6 billion. However, it immediately ran into problems after it could not find market for its products.

Last month electricity supply to the factory was disconnected only for it to be restored a week following the repayment of a Sh73 million debt owed to Kenya Power.

The over 1,000 workers at the mill said they were worried that it may not reopen due to the confusion and corruption around its operations.

Webuye MP Alfred Sambu and area residents are blaming the government for the impasse at Pan Paper arguing that the receivers should be paid the money they are demanding so that the company can be reopened to operate smoothly.

The committee further notes that the Ministry of Industrialisation through its Permanent Secretary Karanja Kibicho was non-committal on the fate of the firm when they appeared before it. According to the report, the PS only said that the government was working with all stakeholders to ensure that the firm will resume normal operations.

Receiver managers acting on behalf of firms owed more than Sh3 billion by the mill announced last week that they would take over all operations of the company whose operations have remained crippled.

The announcement was made by Kieran Day and Ian Small who are planning to take over operations at Pan Paper from managers appointed by the government led by revival team leader Muliaro Wafula.

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