THE government has set aside Sh1 billion for the revival of the stalled Pan Paper mills in Webuye town, Prime Minister Raila Odinga said.
He said the cabinet recommended the allocation of the funds after an earlier attempt to restore operations at the mills flopped due to the heavy debt burden the company had inherited.
The premier who is on two days campaigns trail in Western province however told a rally at the Webuye's Muliro gardens that the government had reviewed her approach to factor plans to offset the accrued debts.
"The company was unable to cope with the debt crisis after the initial attempt because the company incurred losses whenever short term lenders demanded for their dues," he said.
He attributed the failure to sustain operations at the mills to the bureaucratic tendering systems after the government assumed the running of the company.
Odinga informed residents that the government had finally sorted out the short term lenders but was negotiating with those on long term basis to write off accrued interest which now amounts to almost Sh4 billion.
"We intend to be fully operational by this November after we put the management under a caretaker who will run the mills like a commercial enterprise" he announced.
The paper mill shut doors after former directors of the company left the country in a huff on learning that the mills could not repay accrued debts.
Last year, the coalition government attempted to revitalise the paper mills following public outcry from resident's majority of who were directly dependent on the company.