Tag: GOVT

When the Federal Government listed some of its corporations that were not doing well and directed the Bureau of Public Enterprises (BPE) to sell them to private investors, in the spirit of privatisation, many thought the scheme would help to resuscitate the firms. But the comatose state of the pulp and paper mills, sold in 1999, has reopened calls for a  revisit of the privatisation process. OKWY IROEGBU-CHIKEZIE reports on how the sector can be revived to create jobs and boost the economy.

The Federal Government established three pulp and paper mills in the 1960s and 1970s. They are the Nigeria Paper Mill Limited (NPM) in Jebba, Kwara State, established to  produce kraft paper for the packaging industry; the  Nigerian Newsprint Manufacturing Company Ltd. (NNMC) in  Oku-Iboku, Akwa Ibom State, and the Nigeria National Paper Manufacturing Ltd. (NNPMC) in Ogun State, established to produce bond paper.

Two of the mills – NPM, Jebba and NNMC, Oku Iboku – performed creditably in the 1980s.  operating at opitmum capacities. Thus, paper importation faded out during the period. For instance, NPM produced 40,480 tonnes of kraft paper in 1985 and 42,960 million tons in 1986.

These represented 62.3 per cent and 66.17 per cent capacity utilisation respectively. The NNMC also performed optimally at that time.

The volume of newsprint production at NNMC rose from 28,927 tonnes in 1989 to 37,581 tonnes in 1990. Due to the optimal capacity utilisation of the mill, importation of newsprint reduced to 17.5per cent in 1986; 12.5 per cent in 1987 and faded out in 1988.  Nevertheless, the third pulp and paper mill, NNPMC, was abandoned in 1983 when the mill was at about 85 per cent completion. Till the time it was shut down in 1998, the mill did not produce up to five per cent of its installed capacity.

In 1999, the government sought to change the fortunes of the mills with their privitisation but it did not achieve  its goal. Though privatisation has several benefits, such as the reduction of bureaucracy, bad management, corruption, correct defective capital and increase in the quality of goods and services, has not benefitted the paper industry.

In addition, the mills depended on imported long fibre pulp, pulping chemicals, management and technical expertise. At best, since the privatisation, Jebba Paper Mills, formerly the Nigeria Paper Mills, acquired in 2006 by MINL, a subsidiary of India’s Manaksia, has not improved its fortune as the owners are recycling paper rather than engaging in activities that would improve its fortunes to the extent of creating wealth and contributing to the economy.

Also, the furtune of NNPMC in Ogun State (now Iwopin Pulp and Paper Company Limited), sold to an indigenous company – Noxieme Technologies Limited –  has not improved. Last year there were reports the company had found a new core investor – Beulah Technical Company Limited. Till date, there has been no tangible activity at the sprawling complex.

The story of the NNMC Limited, Oku-Iboku, Akwa Ibom State, is not different. After it was sold to Negris Limited, it has been comatose. The nation is reported to be losing N180 billion from the non-performance of the three paper mills. Their non-performance also means that jobs that should have been created are lost to other countries.  This is also worsened by the fact that the Federal Government spends N50 billion on importation of paper annually.

At a meeting targeted at reversing the fortunes of the paper and pulp industry, the Director-General, Raw Materials Research and Development Council (RMRDC), Mr.Ibrahim Hussain Doko Ibrahim, said the cost implication of non-performance of NPM in 2006, 2007 and 2008 annually was N7.8 billion, which reduced to N6.85 billion in 2009, resulting in four-year deficit turnover of N30.25 billion.

“As we are all aware, the technology for pulp and paper production has advanced considerably since the paper mills in the country were established, efforts are being made to reduce environmental impact of pulp and paper production processes through the use of organosolv pulping method which was developed to avoid environmental problems related to sulphur emissions. Many mills globally are also introducing micro and nano materials, in view of their renewability, fibriller structure, multi-functional applications and the possibility of being self-assembled into well-defined architecture,” Ibrahim said.

The RMRDC boss further said the cost implication of the comatose NNMC between 2006 and 2009 to the economy was N18.76 billion, adding that within the four years considered, the deficit turnover equalled N74.8 billion.

“The total cost of non-performance of the three mills to the economy within the four-year period was estimated at N153.05 billion in 2009, and this has been calculated to be about N180 billion before the end of 2015,” he said.

“Coupled with this, the delay in commencing production by the mills is hampering the acquisition of the needed transfer of skills and technology which are important objectives of privatisation in developing countries,” Ibrahim added.

Today, the paper market is dominated by imports from India and other parts of Asia as stakeholders say the privatisation process of the mills was faulty.

Former Senior Manager, Quality Control, NPM, Chief Samson Olalade Ogundele, who worked for over 20 years in the firm, called for the review or outright cancellation of the privatisation of the paper mills in the country. He regretted that new buyers of NPM are not sincere in revitalising the company but in stripping its asset.

“How can a company valued at N30 billion in 1995 be sold for a mere N334 million in 2012 and even at that, the new buyers have not been able to produce papers from the abundance  of forestry solely dedicated to the mill but instead prefer to be recycling used papers.  As far as l know, all the facilities in Jebba are still there, especially, the three paper machines with the last two inaugurated by President Muhammadu Buhari who was then the Head of State.”

Ogundele said: “The new buyers didn’t buy the paper mill to turn it around, especially as they complain of the distance between the forestry and the mill and the inconvenience to them. He asked if they didn’t know that they would have to transport the raw materials to the factory before they bought it in the first place.

“The aim of the government of Nigeria government is to improve production and to employ Nigerians. B ut today Nigerians are casual staff in junior and senior staff positions. The new buyers want to strip the asset of the mill and possibly sell it as scrap. I suggest that government visit the privitisation process because it is a rip-off.”

He regretted that the government and the new buyers of the paper mills have failed to meet the expectations of not only the staff who have not been paid their entitlements but also the public who pay more for imported paper materials.

A professor in the Department of Agriculture and Forestry, University of Ibadan, Oluwadare Oluwafemi, identified the inability to source long fibre trees as one key reason for the non-performance of the mills.

Oluwafemi lamented the abysmal fund devoted to research institutions, calling for the establishment of pulp and paper institute to save the country from the humongous losses.

“It is unfortunate that 90 percent of papers used in Nigeria are imported,” Oluwafemi said, while presenting a paper entitled, ‘Long Fibre Pulp Production in Nigeria: Prospects and Challenges.’”

The professor called for the reversal of the privatisation, saying the process was faulty. He equally urged the government to set up ‘indigenous long fibre pulpwood improvement programme’ and the establishment of small-scale pulp and paper mill, and formation of cooperatives in the sourcing of raw materials. He noted that a country such as India uses rice husk as base raw material to produce pulp creating over 300,000 jobs while the sector provides over 1,500,000 jobs in China.

He listed other nations such as Pakistan with 65,000 jobs, Brazil, 70,000, Canada, 64,000, South Africa, 19,000, and Nigeria an abysmal 500 jobs which he said may be an exaggeration as the three mills are in a poor state.

He advised that the sector is capable of creating thousands of jobs as in other countries.