Cigarette production to stop in Ghana

Ghana's sole tobacco producer British American Tobacco (BAT) is to halt production of cigarettes in Ghana in December, shifting focus to distribution and marketing of its brands from other countries.

The Company said it would stop its manufacturing operations by December 22, 2006 and become a sole distribution and marketing entity importing products from its sister companies in Benin, Nigeria and South Africa.

Mr Tony Okwoju, Director, Corporate and Regulatory Affairs, told Journalists in Accra on Wednesday that the move was an ongoing drive to optimise business processes and drive long-term shareholder value. The resultant halt in replacing its machinery at Takoradi would save it between 20 million dollars to 30 million dollars and lower its cost base.

He said supplies of the Company's brands - Rothmans King Size; Pall Mall; London; Embassy; Diplomat and Tusker - would come from identified regional centres of manufacturing excellence with the requisite economies of scale.

Mr Okwoju said the decision approved by the Board of Directors of the Company would affect an estimated 180 employees in both manufacturing and support functions.

"There will also be a review of the remaining business structure, to achieve the best future-fit organisation,=94 Mr Okwoju said. "The regrettable but inevitable reduction in employee numbers will be managed through a 91negotiated' redundancy programme to ensure that appropriate and realistic packages are advanced."

Mr Okwoju said additional appropriate severance and redundancy payments would be made and the Company would make every effort to minimise the impact on employees by implementing Personal Financial Management Training, Development and Outplacement Programmes offering counselling services during the transition.

He said where possible, employees would receive their packages and would be retained and re-deployed to other areas of the business in Ghana and across West Africa.

He said consultation with workers was to start shortly adding that the process would be transparent inclusive and compliant with the laws of Ghana.

BAT, which was incorporated in Ghana in 1952, would remain on the Ghana Stock Exchange.

The Company contributes an average 22 billion cedis per month in taxes and brings in an estimated 300 billion cedis in export earnings from the 150 billion sticks produced annually.

Mr Okwoju discounted claims that the Company was running away from the Tobacco Bill currently before Parliament.

"We welcome regulation and have worked with regulation in other parts of the world where BAT operates.

"We are also neither losing the war against smuggling of other brands into the country. This is an area we seek cooperation with the security agencies to curb the trend." 27 Sept. 06