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Nigeria’s dying paper mills gasp for oxygen

By Omiko Awa, Gbenga Akinfenwa, Sunday Aikulola (Lagos), Inemesit Akpan-Nsoh (Uyo), Odun Edward (Ilorin) and Anthony Otaru (Abuja)
09 August 2020   |   4:20 am
Following her independence and the attendant boom in the industrial sector, Nigeria held great promise as a developing nation. One of the sub-sectors that enjoyed the growing boom at the time was the paper and allied products sector.

Following her independence and the attendant boom in the industrial sector, Nigeria held great promise as a developing nation. One of the sub-sectors that enjoyed the growing boom at the time was the paper and allied products sector. And on the strength of the volume of raw materials required to service the burgeoning paper factories, which were sourced overseas, the idea of establishing paper mills became novel.

By the late 1960s, precisely in 1969, the idea had crystallised, leading to the establishment of the first paper factory. By 1986, the nation had three pulp and paper mills — the Nigeria Newsprint Manufacturing Company (NNMC), Oku-Iboku, Akwa Ibom State; the National Paper Manufacturing Company (NPMC), Iwopin, Ogun State; and the Nigeria Paper Mill (NPM), Jebba, Kwara State. But their combined output of newsprint and industrial grades of paper still fell under the anticipated 265,000T.

The reason for the sub-optimal performance was attributed, in part, to insufficient supplies of long fibre pulp. While the option of sourcing foreign exchange to import the pulp in the immediate was suggested as a stop-gap measure, designing a programme that would see Nigeria grow plantations of suitable trees as a long-term solution was equally proffered. The former was embraced but the latter option never got verve.

Several years down the line, the paper mills have at various times received different forms of interventions involving huge resources from government and its agencies, including a celebrated privatisation exercise, yet they remain moribund; a shadow of the promise they held when they were established and launched with fanfare.
WITH a growing and viable newspaper industry, a vibrant book and publishing industry, a multifarious printing industry and the litany of allied paper products segment, Nigeria, rather than source from local mills, now depend heavily on foreign manufacturers for her paper needs, spending huge foreign exchange in the process.

The result is that the nation imports corrugated cartons, kraft paper, sack craft paper, linear and chip board, among others, which it ought to be producing for local use and export. Newspaper houses across the country import newsprints. Indigenous publishing houses, which are expected to print over 100 million books for the teeming student population of over 25.6 million, as of 2016, according to Universal Basic Education statistics on the National Book Policy of five books per pupil every year could not live up to expectation. This figure does not include books for pupils/students in pre-primary, secondary and tertiary institutions.

Stakeholders have blamed the state of the paper mills on inefficient management, poor funding and dearth of essential working materials. They also put the loss at billions of Naira. These are besides the huge loss of jobs in the industry.

The Director General of Raw Materials Research and Development Council (RMRDC), Prof. Hussain Doko Ibrahim disclosed that Nigeria loses over N800 billion yearly to paper importation. The Printers Association of Nigeria quoted $1 trillion US dollars annually instead, highlighting the importation of over one million metric tonnes of paper at the cost of $1,000 US dollars per tonne. These are figures in excess of the nation’s 2020 budget of N10.33trillion!

Govt To Overhaul Sector
Displeased by the development, the Senate recently set up a Committee on privatisation led by the former Governor of Abia State, Theodore Orji, to look into the moribund mills. The committee is mandated to investigate the remote and immediate causes of the collapse of the paper industry across the country with a view to coming up with a sector-specific policy.

Commenting on the mills, the Minister of Industry, Trade and Investment, Otunba Richard Adebayo Adeniyi noted that the industry was suffering from lack of robust and adequate guidelines for the development of the sector in Nigeria.

He disclosed that government’s privatisation exercise of the three paper mills in Jebba, Iwopin and Oku-Iboku contributed in crippling the sector.

The Minister, who was represented by the Director, Industrial Development in the Ministry, Adewale R. Bakare, said that government has set in motion a joint inspection team involving all stakeholders — the Ministry, Bureau of Public Enterprises (BPE), the Forestry department, concerned state government agencies, current owners as well as a selection of journalists to be part of the inspection for on-the-spot assessment to ascertain the challenges facing the industry, with a view to find lasting solution for their revitalisation.

According to him: “We are looking at the first quarter of 2021 for the inspection. The COVID-19 pandemic is presently holding the take off; we also need to carry out proper examination on the issues on ground, especially that of movement. However, we are still very dogged and committed to carrying out the inspection.”

He disclosed that the sector needs fund injection, stressing that the new owners are in dire need of capital for the resuscitation and procurement of new equipment and technologies.

Adeniyi noted that since the privatisation of the paper mills, the Nigeria Paper Mill (NPM) in Jebba was the only one functioning, stressing that the country has continued to spend huge foreign exchange on importation of raw materials.

The minister is optimistic that once the policy is implemented, the nation would benefit in the creation of over 150,000 direct and indirect jobs while also conserving its foreign exchange on importation.

Stakeholders Seek Lifeline For Paper Mills
Meanwhile, some stakeholders have called on allied companies such as the Newspaper Proprietors Association of Nigeria (NPAN), Chartered Institute of Professional Printers of Nigeria (CIPPON), publishers and others, to partner with government to resuscitate the three mills to run at full capacities. They also suggested that the organisations could collaborate on funding research on how to grow improved trees, own and manage plantations that would feed the mills, as well as establish training schools to strengthen the capacity of young people on paper mills operations.

Alhaji Yekini Azeez, a member of CIPPON, observed that government was toying with the paper mill industry, saying that if government were serious, it would have reviewed the duty on the importation of published books and importation of paper as raw materials into the country. He noted that the action would make the various organisations in the sector look inward and encourage printing of books in the country.

Azeez observed that a situation where over 80 per cent of primary, secondary and tertiary institutions’ text books were printed outside the country because the duty on the importation of published books is zero per cent, while the duty on importation of paper, as raw materials, is up to 30 per cent, was worrisome and discourages local patronage.

AS at 1990, the Oku-Iboku plant produced 37,581 metric tonnes of newsprint, which reduced the country’s importation by 12.7 per cent. It was, however, shutdown in 1993 before its completion and consequently privatised. The mill, which had produced 42,960 tons of kraft paper as of 1986, is the biggest of the three mills. The Nigerian National Paper Manufacturing Company (NNPMC) was planned to produce fully bleached pulp for the production of 68,000 tons of various grades of fine writing, printing and cultural papers on a yearly basis, but the plant has, from its pre-privatisation to post-privatisation era, so far produced for only six months.

NNPMC, formerly Iwopin Pulp and Paper Company (IPPC), located in Ogun Waterside Local Government Council of Ogun State, was established in 1975 under the Companies Act of 1968 and was incorporated under its present name on December 17, 1992, as a private limited liability company to produce quality bond paper and pulp in the country and for the West African sub-region. It began commercial production in February 1995. 

The Guardian 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 to no avail as inadequate electricity supply stalled the process in 1998.

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

In 2006, when government took steps to sell it, two indigenous firms — Noxieme Technologies Limited and Beulah Technical Services Company Limited (BETCO) — showed interest. But their desperation to outsmart each other caused a serious setback, as they ended in court. The intervention of the host community, Iwopin, based on the negative effect of the litigation on them, led to the out of court settlement that saw BETCO as the new owner in 2014. But since the take over, no tangible activity has taken place 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 N3.1billion.

However, due to diverse unresolved issues, especially the forestry plantations concession license, the company refrained from paying the ‘bid price’ and in the process, it 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 N1billion and in addition, compensate the landowners and secure the forestry concession license from both Ondo and Ogun state governments.

The Guardian, on a visit to the company in 2017, observed that the buildings acquired by the new owner have been renovated and painted, as well as the offices. The grasses and lawns were well trimmed, while the administrative block and staff quarters were also not exempted. The workers, according to investigations, were over 50, 30 of whom were security guards, resuming daily and collecting salaries and other allowances. Yet, the company was producing nothing.
Though the Managing Director of the company was not on seat at the time, a top official of the company told The Guardian that they never envisaged what they met on ground when they bought the company, noting that their major challenges were the obsolete equipment and the unavailability of raw materials.

One key challenge faced by the investors was their inability to source long fibre trees. This was 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 to check what the company had on ground. And whenever they realize that raw materials were not readily available, they jettison the business.

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 pulled out, Ogun was not given the encouragement to produce the needed raw materials.

According to the source, the company’s power supply network is not connected to the national grid, so, it solely dependends on diesel to operate. He disclosed that to start the engines, four drums of diesel are needed, stressing that constant use of generator will definitely increase production cost and the price of products, thereby reducing the gains to the economy.

On how the company was able to pay salaries and maintain minor operations despite these challenges, the source said it was from owner’s purse.

But The Guardian reliably gathered that monies used were generated from the sale of some obsolete equipment, a development that allegedly caused rancour among the children of the investors.

The development did not go down well with the experts, including the Manufacturers Association of Nigeria (MAN) and the Raw Materials Research and Development Council (RMRDC), who ascribed the failure of the plant to function properly to faulty privatisation process and sabotage.

Stakeholders in the sector, who also lent their voices, claimed that the privatisation of the three paper mills were handed to incapable investors, who have little or no knowledge of the milling industry. They, however, called on government to reverse the privatisation process with a view to making those knowledgeable about the sector to handle it, saying paper mills, if properly handled, are money-spinners.

Host Communities Rue Lost Opportunities, Jobs
Kamorudeen Ogunlewe, an artisan, lamented that the sorry state of the company has negatively impacted on the community, as its economic and social life has been paralyzed.

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

He said: “That has become a thing of the past. Our children no longer stay here; they moved to other cities where they can get job. This development has reduced our population; young men are moving out to where their services are needed.

“The only resource we have here is the company; the Federal Government and Ogun State Government should assist us by encouraging BETCO. We cannot afford to see them leave. Government should make flexible the agreement on sourcing woods (raw materials) for the production of paper. It is not only in our interest, but also for our children, born and unborn. The fact is, the state will also generate more funds from the company.”

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

NNMC Now A Ghost Town
More than 25 years since the Nigeria Newsprint Manufacturing Company (NNMC), Oku Iboku in Akwa Ibom State was shut down and over 10 years after it was privatised, the company has failed to resume operations and remained comatose. With this development, the promised production of different categories of paper for local press, paper converters and the education system remains a mirage.

A visit to NNMC, Oku Iboku, reveals a monument almost with no roofs and vandalised office blocks. The company came into limelight in 1986, but was liquidated in 2008. It was set up to produce 100,000 metric tons of finished newsprint per annum. Within the period the mill was in operation, it employed over 2,000 Nigerians and expatriates, with its forestry division employing more than half the number. Before the company was shut down in 1994, it was producing international standard newsprint, which was exported to different countries, including the United States of America, Canada, Ghana, Sierra Leone and many others.

With the privatisation policy of the Federal Government, the Bureau of Public Enterprises (BPE), under the principle of guided liquidation in 2008, sold the newsprint company for a little above N4 billion to an indigenous firm, Negris Holding Limited. Negris, a power engineering company, emerged successful in the bid, while foreign investors in paper production and manufacturing, who also bade, lost out. 

With the Liquidation Agreement, NEGRIS was given a five-year moratorium to reactivate and operate the company or face the risk of revocation of the agreement.

When The Guardian interrogated one of the indigenes on why the one-time tourist attraction has become desolate, he said: “I will beg of you to leave this environment before it is too late because government people have been coming to ask questions. National Assembly people have been coming, but the story has not changed.”

The Guardian gathered that Oku Iboku is in a serious boundary dispute with its neighbour, Ikot Offiong in Odukpani local government council in Cross River State. A source alleged that when the House Committee on Privatisation and Commercialisation visited the company early this year, the community accused Negris of assets stripping.

Nigeria Paper Mill, Jebba, Trudging On
Built and originally owned by Nigerians, the paper mill was the largest in West Africa. But due to alleged mismanagement and lack of investments, it closed shop, leaving many jobless from within town and from far-flung locations.
In 2005, it was listed among the companies registered for privatisation. The name expectedly changed to ‘Jebba Paper Mill’ under the control of some Indian Nationals, led by Mr. Dinesh Kumar who till date remains the General Manager.

Acquired from the Bureau of Public Enterprises (BPE) under liquidation arrangement, the company, which has the potentials of three production capacities before the take over, now produces below its former capacities, especially as one of its three machines is dysfunctional.

Primarily, the mill produces rolls of brown papers, which serves as raw materials for companies producing envelopes, wallpapers and decoration wrappers. Industries in Lagos, Ogun, Kaduna and Kano states were the leading consumers of the brown paper rolls as they off load same on weekly basis for their productions.

Former Kwara State Governor, Bukola Saraki, had as part of his administration’s industrial drive, flagged off commercial production of the newly resuscitated Jebba Paper Mills in the year under review.

At present, according to Kumar, the company has in its employment over 100 permanent staff and about 200 casual workers.

The company’s Managing Director stated that when the mill is fully operational, more hands would be required to drive its production capacities just as he disclosed that the paper mill would also venture into massive rice production to support government’s food security policy.

He canvassed for more tax friendly policies, as well as increased access to raw materials at cheaper rates to enable the company survive.