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BY LUKE KAPCHANGA DN/WEBUYE 1/12/2008 PANPAPER.NEWSFEATURE.
Mismanagement and inefficiency is the cause of financial troubles at Pan Paper mills.
This
revelations comes as the fate of about 1,500 employees hangs in balance
, with the closed down mill not re-opening after closure.
The
tradition by top management to single source suppliers is behind the
fleecing of the company of profits, with no tendering process.
“There is to much inefficiency at the mill”, a highly placed source said.
The
source who has been working at the firm as a senior manager for over
twenty years, but declined to be named blamed top managers for not
having fixed rates for buying of papers at the factory.
Different buyers have different buying prices, with Asians having advantage of discounts and taking papers on credit.
The retaining of retired employees who have no special skills is another avenue from which the company losses money.
The
company with about 70 retired employees , who are enlisted as
consultants are said to get three pay slips, yet are not productive.
Yet the company management have given the government from which it seeks a package to be salvaged a different version of reasons behind its financial woes.
“Our recent difficulties have been caused by external factors , which have seriously impacted cost of the vital inputs of energy and wood” says the report to the government.
The
mill which closed down two weeks ago, was said to be under maintenance
by top managers, but employees disputed this saying it was a cover up.
The
machinery is obsolete as the spares said to be imported are merely sent
from the parent company in India , and indicated as new.
One
employee said, that annual maintenance can not take place when there
are no spares purchased and already talk of re-opening is gaining
currency when no major work has not been seen.
The closure came when the suppliers of fuel oil, Kobil cut supplies for accumulated debts and demanded down payment for resumption.
For
the first time of the company’s history employees are getting their
salary in installments, amid heightened fears that retrenchment is on
the way.
The
problems which are traced to 2006, are solely attributed to the rising
cost of both fuel oil and electricity as the firm is indeed one of the
largest consumers in the country.
“Pan paper is forced to depend upon fuel oil and KPLC Power, as there is no alternative energy sources such as coal, which is available to competitors in South Africa , Egypt and Indonesia etc,”, the report says further.
Management have come up with a five point recovery program, which it has requested for government support, as a short term measure to take five years.
This includes reducing of wood royalty from shs.700 to shs360.
They urge that 90% of their packaging grades for the product mix is exposed to duty free imports mostly from Tanzania paper mills.
They are calling on the government to impose import duty on imported paper upto 35%.
Importers are also accused of enjoying exemptions, by not paying duty on paper used for export packing, imported
paper from COMESA and East African community, Text Book printing papers
under UNDP , in addition they do not attract VAT.
They want the duty paid on imported machinery waived.
They are also demanding the KPLC, to charge them special interests.
The last being asking the government to inject in shs.900million.
Shs. 700million is to be used in clearing outstanding overdrafts with various banks and the balance for internal operations.
In
the long term program, they are requesting for 80 hectare of land to
plant trees for their bio-fuel project as an alternative source of energy.
“In
absence of a level playing field, it is becoming impossible to compete.
We there fore request for a rational review of the tariff structure to
safeguard the local industry’s interest”, the report urges further.
But the source is of different view, ”the government should not just respond with a review package without change in management”.
The
source called for the government to appoint one of the top managers to
oversee restructure program and for purposes of good corporate
governance .
The
factory is said to be a bottomless pit , which has not been able to
make a profit since 2006, yet pays monthly shs.100million as technical
fee.
Most
bizarre is the writing of shs.1billion debt by Malde transporters, as
circumstances behind the accumulation of the debt is suspicious.
The debt was written off, shortly before the current Chief Executive Officer, Mr. N.K. Saha took over.
Since taking over the running of the firm, Mr. Saha has not managed to to steer the firm to make a profit other than sinking deeper and deeper.
Because of single sourcing suppliers inflate prices and the machinery delivered are of reconditioned nature.
Pan Paper as a project was conceived by the
government in the late sixties to utilize the vast forestry plantations
and develop socio- economic status of the Western region.
Orient Paper & Industries Ltd(OPIL), provided technical know-how and management services to the company since inception.
The Paper mill commenced production in 1974 with rated capacity of 45,000 tons of paper per year.
It has gone through several diversified expansions raising its rated capacity to 120,000 tones per year.
Fixed assets of the company are currently re-valued at over shs.15.5billion compared to original value of shs.360million.
Pan paper is a large industrial complex, catering to fragmented domestic paper and board requirements.
It
houses chemical and mechanical pulp mills, waste paper recycling and
Deinking plant, four paper machines, Chloro-Akali plant including power
generation plant and workshop.
Its been accredited with ISO 9001 for product quality and ISO 14001 for ensuring and environmental friendly operations.
Webuye mayor Dinah Wattimah is worried about the changing fortunes of the paper mill and does not want to see its demise.
“Webuye is pan paper, and Pan paper is Webuye”, she said in her office.
The
government she stressed has no option but come to the rescue of the
paper mill because of its economic importance not only to the people of
Webuye nut the country at large.
“According
to the records the company contributes shs.6billion to the government ,
by paying taxes in various ways, and it can not be allowed to sink”,
she added.
Her
greatest worry, is the lose of livelihoods of thousands of town
residents , whose income revolve around the activity of the company.
Insecurity will increase , she says, if the company is to retrench workers most of whom are causal and rent house within town
Small business she laments may also suffer, and single mothers who are vendors on the streets will be affected
The municipal council gets most of its revenue from the company in from of rates, but currently owes it shs.1.3million.
The town came into existence due to the presence of the mill, in 1974 and most of the town estates are owned by the company.
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