Government to Rescue Post Office

Communications Minister Ivy Matsepe-Casaburri has admitted that government will have to continue supporting the South Africa Post Office financially, reversing an earlier decision to end postal subsidies in March this year.

Government is expected to extend a lifeline of up to R500m to the Post Office to help cover losses estimated at up to R750m for the year to March 2001.
Longer-term subsidies of about R200m a year are also believed to be under consideration for postal infrastructure development, particularly in underserviced areas.
This comes as the cabinet is expected to make a decision next week on a request by the Post Office board to terminate its management contract with New Zealand’s Transend Worldwide.
Transend is estimated to have already earned more than R100m from the contract, on which it is now accused of nondelivery. Transend has defended its performance, saying it has successfully delivered results on a number of key agreed projects and objectives.
Matsepe-Casaburri told Parliament this week that in terms of enterprise reform, the SA Post Office had not performed as expected. “From our own assessment, government will have to continue supporting the SA Post Office whilst we continue to seek avenues for financial stability.”
The minister said three government teams were considering the value of the lifeline. This may also include a 1999 subsidy that was not paid to the SA Post Office, due partly to the turnaround hopes raised by the signing of the contract with Transend Worldwide.
According to 1999-2000 national expenditure figures, the Post Office was allocated R307,6m for “postal policy”, the biggest chunk of which was earmarked for subsidising operations. The following year, the amount was reduced to R21,3m, when government terminated the subsidy in the wake of the agreement with Transend Worldwide.
SA Post Office CE Maanda Manyatshe said yesterday that government had agreed to cancel the postal subsidy based on “misleading information” supplied by the previous management team.
The organisation sold property and other assets, then leased them back, which had made the books look good, but was not a true reflection of finances, he said. There was also a R1,8bn deficit in the medical aid fund for pensioners.
“The financial performance of the SA Post Office has been going down, with mail and other volumes declining through the years,” he said.
Manyatshe said talks were being held with government to determine a new subsidy structure as the “days of being given a blank cheque are over”. Longterm financial requirements would be agreed upon upfront.
The SA Post Office had to deliver on universal service obligations outlined by government, such as building post offices in rural areas and developing the Post Bank for the unbanked masses.
Manyatshe said these were largely unprofitable exercises which raised the Post Office’s costs. “All over the world, governments assist with financing these services,” he said.
Matsepe-Casaburri stressed that government would like to see whatever money it gave to the Post Office spent on delivering infrastructure in underserviced areas.
She said government officials were not only busy trying to “establish the figures” of the lifeboat, but also examining all the possible “leakages”.
A cabinet committee which consists of Matsepe-Casaburri and the ministers of finance and public enterprises was being kept informed of all progress, including on the international forensic investigators looking into the allegations of mismanagement and fraud within the Post Office.
by Robyn Chalmers And Vuyo Mvoko
Copyright Business Day. Distributed by All Africa Global Media(AllAfrica.com)