Post Office needs a R2.3bn bailout

2014-11-02 18:00

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Without an injection of R2.3?billion and a shedding of 1?680 surplus staff, the SA Post Office (Sapo) is heading for disaster.

In a presentation made to the parliamentary portfolio committee on Friday, Sapo gave the strongest indication yet that it was in a critical condition.

Sapo’s annual financial statements for March 31 2014 are still not finalised and the Post Office said engagements were taking place with the telecoms and postal services department and National Treasury to conclude outstanding audit matters.

Financially, the Post Office is in serious trouble. It reported revenue of R2.76?billion and expenses of R3.28?billion, with R1.95?billion being staff expenses. The resulting net loss was R627?million.

Its financial state puts it in a difficult position in the face of the current labour strike, which started about 10 weeks ago after a dispute about the process of converting workers from casual to permanent employment.

Sapo’s flexible labour strategy to convert 7?945 casual workers into permanent employees was adopted last year and it said on Friday the conversion of the workers over three to four years would cost R855?million if it was done this year.

Various unprotected strikes since January have cost about R66?million in lost revenue, and R9.9?million for security and insurance claims.

The Post Office has to get rid of 1?680 surplus staff as a condition of its overdraft, which was R353?million by August 2014.

Thirty four executive positions are currently vacant.

A capital expenditure investment of R2.3?billion is required by the Post Office, primarily to invest in its aging IT infrastructure as well as in configuration of post offices to meet the bank and Financial Services Board compliance requirements.

The Post Office also has no funding for its universal service obligation, which costs about R400?million, to bring postal services to rural areas.

DA member of the committee, Cameron MacKenzie, said the Post Office also revealed in the presentation that some casual workers had not received their salaries and that a R320?million guarantee had been issued by government.

“But government cannot keep issuing guarantees month to month,” said MacKenzie.

Clyde Mervin, the president of the Communication Workers’ Union, who was also at the presentation, said the presentation was a display of the incompetence of the Sapo management and board.

City Press also understands that Sapo chief executive Chris Hlekane has been suspended pending the outcome of an investigation.

Previously it was said the CEO had been on “extended leave”.

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