Nigerian Newsprint Manufacturing Co. Ltd

BACKGROUND INFORMATION

Nigerian Newsprint Manufacturing Co. Ltd is a Limited Liability Company established to manufacture newsprint and allied products. It is located in Oku-Iboku, Akwa Ibom State.

The company was incorporated in 1975. The equity share holding of the company is as follows:

Federal Government of Nigeria              90%,

Akwa Ibom State Govt. (AKSG)             5.5%

Cross River State Govt. (CRSG)                         4.5%

Nigerian Newsprint Manufacturing Company Limited is the first pulp and Paper Mill in the world to use the tropical hardwood – gmelina arborea for the manufacture of newsprint. The raw material, gmelina arborea is sourced from local forestry located at Awi, Obom Itiat, Edondon and Nsan in Cross River State, Oku-Iboku, Ikot Umo Essien and Ntak Inyang in Akwa Ibom State.  In all, the plantation land area covers 15,391 hectres.

The company has 21,700 hectres of undeveloped land for expansion of gmelina plantation at Nsan while, it had acquired additional hectares of land at Ndon Eka- Nkop, Usung Odot and Odot Ediong in Odukpani L.G.A of Cross River State as part of its plan to expand its gmelina plantation. At inception, Gmelina arborea accounted for about 80% (eighty percent) of the total raw material content, and was blended with 20% (twenty percent) imported long fibre pulp. Research and experimentation at NNMC have since reduced the imported long fibre content to about 17.5 %.

There is a pilot scheme for the production of pinewood, which is the main source of the long fibre, hence the plantation of nursery pine exists at the Foster Wheeler Housing Estate on Oku-Iboku.  Eventually it is hoped that 100% of NNMC’s raw materials can be sourced locally in Nigeria.

NNMC was established by the FGN as part of its strategic plan for the production of paper and pulp in the country. The current Mission Statement of the Mill is to “be a paper manufacturing Company that produces and provide newsprint for local print media and for other end users as well as export, save /earn the Country the much needed foreign exchange. In the process, it will be providing Nigerians with the technological base and the basic skills for paper production and fulfill the twin objectives of industrialization and self reliance”.

FACILITIES

The Company has paper production machinery with a combined installed capacity of 300 metric tonnes per day or 100,000 metric tonnes per year of newsprint. During its period of operation, the Mill produced three standard grades of newsprint from the newsprint furnish for both domestic and export markets. The three grades produced in the factory were:

• Standard Newsprint, 8 g /m² (NPW 59)
• Machine Finished Mechanical Printing Paper, 60 g/m² (MFP 60)
• Machine Finished Mechanical Printing Paper, 75 g/m² (MFP 75)

These grades were produced in jumbo reels of 4,200 mm wide and then cut to customers’ sizes ranging from 600 mm to 1400 mm.

DESCRIPTION OF PRODUCTS

The products were used to produce the following end – products:

• – Newsprints
• – Periodicals
• – Magazines and Journals
• – Exercise Books
• – Low-cost Text Books
• – Books for Literatures
• – Office Stationery (writing papers, duplicating papers, photocopying papers etc.)
• – Writing Pads and Jotters
• – Stencil Papers
• – Pools Coupons
• – Telex Rolls
• – Calculating Machine Papers
• – Envelopes etc

SECTOR DATA

THE MACRO-ENVIRONMENT

The Economic-fiscal policies on Pulp and Paper Industry are investment- oriented. The Federal Government of Nigeria encourages investment in the sector by allowing some levels of rebates in import/export duties and tariff.

The Technical-development in the sector in the last 5 years has been very poor considering its declining conditions for the past ten years and more. To this end, it is obvious that the industry has a set-back in the areas of industrial development and technological advancement.

THE MARKET ENVIRONMENT

Considering the market for paper products, the growth potential of the sector is highly encouraging. Although, the sector has suffered a setback in recent years, with adequate funding and technological advancement in its processes, the Pulp and Paper sector is bound to be one of the most promising in the Nigerian economy.

NNMC is the only newsprint manufacturer in Nigeria and, indeed, in the West Africa sub-region. Its major competitors are the Newsprint Importers – both Nigerian and Foreign Firms.

CRITICAL REQUIREMENTS FOR SUCCESS

The critical requirements for success in the pulp and paper industry include, but are not limited to the following:

• Quality of technology as it concerns the machinery, which are obsolete as compared to the new machinery (up- to- date plants)
• High raw material stocks
• Up-dated technical skills for effective utilization of the machinery
• Proper maintenance culture

PRIVATISATION PLAN

Government is offering 90% of the company’s shares for sale to a core investor or a consortium of foreign and/or domestic investor.

 THE PERFORMANCE OF THE ENTERPRISE

NNMC over the last ten years has not been in operation; therefore a   critical review of its performance cannot be carried out. However, prior to this time, the plant was producing below optimal level due to inadequate funding. It is expected that once the enterprise undergoes reform and restructuring through the privatisation of the enterprise, the level of production will increase and the demand for the product will be high considering the level of demand for the product.

 THE BUSINESS OPPORTUNITY

The need for the enterprises’ products is enormous considering its product range to both local and foreign consumers.  Locally, the Company operated a direct-sales policy to all end-users with own facilities. The buyers of NNMC,s products were in the following categories:-

• – The Print Media
• – The Converters
• – The Publishers and others

The local demand for NNMC’s products was, and is still, very encouraging and remains unsatisfied due largely to irregular production. Today, the price of one metric tonne of imported newsprint in Nigeria varies between N120, 000.00 and N150, 000.00 per tonne. The following Table shows the Company’s newsprint market share from 1988 to 1992.

NNMC’s NEWSPRINT MARKET SHARE FROM 1988 TO 1992.

Year	Quantity Produced (Metric Tonnes)	Market Requirement (Metric Tonnes)	Percentage Market Share
1988	24,682	60,000	41%
1989	28,889	60,000	48%
1990	37,581	70,000	53.7%
1991	21,781	70,000	31.1%
1992	13,300	72,000	18.4%

NNMC’s newsprint was also fully accepted in the international paper market because its quality met international standards. In October 1987, 600 metric tonnes of 48.8 gsm newsprint produced by NNMC were exported to end-users in Minneapolis, Minnesota, USA and in November of the same year, 1450 metric tonnes of 48.8 gsm of NNMC’s newsprint were exported to Europe. Both customers, being fully satisfied, gave favorable commendations on the quality of NNMC’s paper. Thereafter, NNMC’s paper had been exported to:

• – Ghana
• – Togo
• – Cameroun
• – Zimbabwe
• – Thailand
• – Hong Kong
• – Taiwan
• – USA          
• – United Kingdom

while new requests were received from:

• – Liebig (Germany)
• – India       
• – Bangladesh
• – Kenya
• – Iran                      
• – Canada and some European Countries prior to the shutdown of the Mill.

There is therefore a viable and profitable local and export markets for both short fibre pulp and newsprint manufactured by NNMC. On the reactivation of the Company and start-up of production in the factory, the availability of export incentives should encourage any prospective Investor to explore the export markets more aggressively while, at the same time, the dynamics of the Nigerian domestic market offers an assured basis for substantial growth.

PROSPECTS

The prospects for the success of this sector are very high considering the enormous demand for the product in Nigeria and some West African countries. The increasing number of newsprint media companies in Nigeria and other sub-Saharan Africa will make the demand for the newsprints materials even more higher.

It is believed that in the event that the enterprise is privatised and there is capital injection into the enterprise to resume the production process, the NNMC will maintain its status as the only newsprint manufacturer in Nigeria and in the West African sub-region.

Therefore, we request prospective investors, buyers and experts in the industry to invest and turn this enterprise around to attain a high standard with world class technology given its position as a major newsprint manufacturing company in Africa. Its excess output has ready market in exports to earn foreign exchange. Consequently, the commercial attractiveness of this enterprise cannot be over-emphasized.