Community, stakeholders seek lifeline for privatised Iwopin Paper Mill

It may no longer be news that 90 per cent of papers used in Nigeria are imported; what is, however, sad at a time like this is the fact that the country is losing over N400b annually to paper products importation, due to non-performance of the three paper mills, despite the much-touted privatisation process.

Of the three paper mills-the Nigeria Paper Mill (NPM) Limited located in Jebba, Kwara State; Nigerian Newsprint Manufacturing Co. (NNMC) Ltd. Oku-Iboku, Akwa Ibom State; and Nigerian National Paper Manufacturing Company (NNPMC) Ltd. Iwopin (formerly Iwopin Pulp and Paper Company), in Ogun Waterside Local Government Area of the state, only the NPM and NNMC were producing, though at a low capacity, the NNPMC did not work.

As at 1990, the Oku-Iboku plant had produced 37,581 metric tons of newsprint, which reduced the country’s importation by 12.7 per cent, but was shutdown in 1993 before its completion, and was consequently sold. The NPM, which had produced 42,960 tons of kraft paper as of 1986, is the biggest of them all.

NNPMC is the worst of them. It was planned to produce fully bleached pulp for production of 68,000 tons of various grades of fine writing, printing and cultural papers on annual basis, but the plant from its pre-privatisation to post-privatisation era has so far produced for only six months.

It was learnt that with initial dependence on imported long fibre pulp, the mill was planned to produce long fibre pulp from Pinus species established in plantations in different locations in the country, but from inception, it has tottered ceaselessly, occasioned first by equipment installation delays.

Despite the commissioning of the first phase of the mill in 1994, as a result of the joint venture collaboration with Wittermore Paterson Investment BV of Germany, no production took place. There were efforts to run the mill on imported raw materials on one of the paper machines, but the effort stopped in 1998 because of problem of electricity supply.

The plant, till now is not connected to the national grid. High cost of diesel was one of the factors responsible for its initial failure, as it takes the company approximately 52,000 liters of diesel per day to function.

In 2006, when government took steps to sell the company, two indigenous firms-Noxieme Technologies Limited and Beulah Technical Services Company Limited (BETCO), showed keen interest. But their desperation to outsmart each other caused a serious setback, as they ended in court. The intervention of the host community-Iwopin, which intervened, based on the negative effect of the litigation on the community, led to the out of court settlement that saw BETCO as the new owner in 2014. But since it took over, no tangible activity had being carried out at the mill.

The privatisation process started in 2001 with the advertisement for expression of interest published in 2002.  BETCO won the bid with an offer price of N3.1 billion.

However, due to several unresolved issues, especially the forestry plantations concession license, BETCO, it was learnt refrained from paying the bid price and in the process, BETCO took the Federal Government to court to restrain the Bureau of Public Enterprise (BPE) from annulling the sale and realising the bid bond of $750,000 without resolving the outstanding issues.

The core investor and BPE eventually negotiated an out of court settlement with the consent judgment obtained at the Federal High Court, Lagos on December 6, 2013.  To conclude the transaction, BETCO was asked to pay N1 billion and in addition, compensate the landowners and secure the forestry concession license from both Ondo and Ogun State governments.

The Guardian visited the company three weeks ago. It was observed that the buildings acquired have been renovated, painted and looking radiant, likewise the offices. The grasses and lawns were well trimmed, while the administrative block and staff quarters, have also been given new looks. The workers, according to investigations are over 50, 30 of which are security guards, resuming at their duty posts everyday and collecting salaries and other allowances, yet the company is not producing anything.

Though the Managing Director of the company was not on seat as at time of the visit, nobody was willing to speak with the reporter, despite nondisclosure of his identity. But a top official of the company, told The Guardian in private that they never envisaged what they met on ground when they bought the company, noting that their major challenge is the obsolete equipment met on ground, coupled with unavailability of raw materials.

One key challenge faced by the investors, is their inability to source long fiber trees. This is a major problem the plant may likely continue to face even after becoming fully operational, as they are totally dependent on imported long fiber pulp and chemicals, which might not help in reducing the cost of local paper products.

It was learnt that core foreign investors, were always discouraged from partnering with the company whenever they come around to check what the company has on ground. Whenever it occurs to them that raw materials are not readily available, they take to their heels. The Guardian learnt that at the initial stage, the Federal Government established the company in Iwopin to get ready raw materials from Ogun and Ondo. But since Ondo has since pulled out, Ogun that is left does not encourage with raw materials.

“Another problem we are facing is electricity supply. We are not connected to the national grid; we are solely dependent on diesel. To start the engines, we’ll need four drums of diesel. Constant use of generator is definitely increasing our cost of production and hence the price of the products, thereby reducing the gains to the economy,” he said.

When asked how the company has been able to pay salaries and maintain minor operations, the source was reluctant, but later said it was from owner’s purse. But The Guardian reliably gathered that monies used are generated from the sale of the obsolete equipment, a development that allegedly caused rancour among the children of the investors.

The source disclosed that the company, government and other stakeholders had a meeting recently and reached a compromise; assuring that by August the company would be fully operational.

The development has not gone down well with experts, including the Manufacturers Association of Nigeria (MAN) and the Raw Materials Research and Development Council (RMRDC), who have ascribed the failure of the plant to faulty privatisation process and sabotage. Industry stakeholders, who also lent their voices, claim the privatisation of the three paper mills, were handed to incapable investors, who have little or no knowledge of the milling industry. The general song in their mouths now is the call for the reversal of the privatisation process.

Kamorudeen Ogunlewe, an artisan, who claimed to have been born in the community, lamented that the sorry state of the company has negatively impacted on the community, as its economic and social life has completely been paralysed.

He noted that years back when the company was fully operational, the community market always enjoyed good patronage, from the workers, but since the problem started, the market has closed down. He added that every last Fridays always looked like festive period, as the workers celebrated whenever they received their salaries.

“That has become a thing of the past. Our children no longer stay here, they move to others cities where they can get job. This development has reduced our population, young men are moving out to where their services are needed. All the Ijebus were beneficiaries when it was functional, now it has affected everyone.

“The only resources we have here is the company, the Federal Government and Governor Ibikunle Amosun should assist us by encouraging BETCO. We can’t afford to see them leave; Amosun should make flexible his agreement on sourcing woods (raw materials) for the production of paper. It is not only for our interest but also for our children, born and unborn. The fact is that the state will also generate more funds from the company,” Ogunlewe said.

Bernard Ike, a commercial motorcyclist, who blamed government for the development, appealed to both the state and Federal Government to encourage the company to start its operation.

“They need government support to reduce poverty in this area. We have not benefitted from the present administration, yet they are generating more revenue from here and there is still more to be generated. Amosun should ensure there is conducive environment for investments to thrive.

The Guardian later got the Managing Director/CEO of the company, Ebun Braithwaite on phone, who assured that the company is facing the challenges head-on, and confident that with rev at the company, activities which would impact positively on the host community and indeed the state. She stated however, that the problem of Iwopin Pulp & Paper Company has to be looked at within the larger context of the challenges facing the manufacturing sector in general.

“The reality is that Nigeria is not yet in a position to manufacture paper in a commercially viable way, meaning without dependency on imported pulp. The country is probably about 10 years away from producing paper from pulp, because we lack sustainable raw material resources; apart from the operational, technical and infrastructural challenges. As far as I know, there is no forest in the country that has pulpwood in sufficient quantities to meet the demands of the paper industry.

“The solution is for the state governments to begin to take a critical look at the use of our forests and to urgently address the issue of deforestation and to ensure that forests are sustainably and responsibly managed. Until this is done, Nigeria will continue to depend on imported paper products.”