The Government is acting on proposals by a task force to return Pan Paper Mills to profitability.

Finance minister Amos Kimunya said the Treasury would arrange for a cash injection of Sh140 million and a debt treatment for Sh366 million as recommended by the team.

The task force also wanted the other shareholder in the firm - Birla Group of India -to inject Sh185 million into the business and to convert a debt of Sh386 million into equity.

"The injection of more cash and adequate wood supplies are being arranged," Mr Kimunya said.

The plans include availing land to the company for growing bio-mass for a proposed co-generation project, which on completion will reduce the firm's dependence on fuel oil and power from the national grid.

Treasury says it is also considering financial concessions and improvement of internal efficiencies for the company.

The mill has a paper manufacturing capacity of 120 000 tonnes a year.

The Government, ICDC and Development Bank of Kenya own 41.1 per cent of the company while Birla Group has a majority stake of 54.4 per cent.

East African Development Bank owns 3.6 per cent and other shareholders 0.9 per cent.

Panpaper is projecting Sh5.2 billion in turnover in the current financial year and also wants debts to the tune of Sh6 billion, rescheduled.