Sassa: Cash grants at risk again as CPS says it has not received any payment

2018-05-25 13:43
Sassa head office (Alet Pretorius, Gallo Images)

Sassa head office (Alet Pretorius, Gallo Images)

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Cash Paymaster Services (CPS) has asked the Constitutional Court to order National Treasury to negotiate a monthly "floor fee" for the remainder of its contract with the South African Social Security Agency (Sassa) before May 31.

In March, the Constitutional Court ordered Sassa and CPS to continue its invalid contract to distribute the cash portion of the social grants system in rural areas for another six months.

The cash portion of the system services roughly 2.5 million people, less than 30% of the scheme.

On Wednesday, CPS filed a letter at court, saying it has not been able to successfully invoice Sassa since April 1 for various reasons, and has therefore received no new payments from Sassa.

ALSO READ: Sassa cancels tender process to find CPS replacement

It has used cash reserves to continue to operate the cash portion of the grants system in the interim, while it waited for National Treasury to recommend a new payment structure for the remainder of the contract.

CPS only has cash reserves that can last until May 31, which parties were made aware of in February, the letter from CPS' lawyers Smit Sewgoolam Inc reads.

"Our instructions are that CPS requires cash income urgently to sustain its operations for the month of June. Preparations for the June payment cycle will commence on 27 May 2018.

"We accordingly respectfully request the Chief Justice to issue the directions that CPS sought in its affidavit of 11 May 2018, alternatively to advise CPS whether it must bring an urgent formal application in respect of any of these directions," the letter finished.

'Floor fee'

In the May 11 affidavit, Herman Kotze, CEO of CPS's parent company Net1, argued that Treasury's recommendation, combined with the continued migration of Sassa beneficiaries to other options, was causing CPS to operate at a loss.

On April 30, Treasury recommended a price of R44.35 per beneficiary for cash payments for the remainder of the contract until September.

ALSO READ: Shabangu suspended Sassa tender to replace CPS due to 'challenges'

"CPS can only deliver a reliable and uninterrupted service if it operates a sustainable business," Kotze's affidavit reads.

"For the reasons set out below, Treasury's recommendation does not protect CPS from operating at a considerable loss, which it cannot reasonably be expected to do."

Kotze also said that Treasury's recommendation did not allow for the possibility of a "floor fee" to help CPS cover its operational costs while beneficiaries are being migrated.

Operating costs

"This is highly problematic because it makes no provision for Sassa's announced intention to dramatically reduce the number of beneficiaries being serviced by CPS."

Their current operating costs are R147m a month to deliver cash to rural areas, and they are still servicing the 10 000 cash pay points.

The company asked that the court order Treasury to recommend a minimum monthly fee that Sassa can pay CPS, to serve as a floor limit, within 14 days.

ALSO READ: Shabangu unhappy with Grindrod's R10 Sassa charge

In the interim, CPS wants to "invoice Sassa according to Treasury's recommendation of April 30" and wants any shortfall or overpayment made to CPS for the services provided in April 2018 to be corrected upon final determination by the court.

Sassa spokesperson Kgomotso Diseko told News24 it will wait for the court's intervention as the negotiations have always been handled between National Treasury and CPS.

Treasury's communications office told News24 on Friday that it does not make payments to CPS; Sassa does.

"Treasury has as required by the Constitutional Court investigated and made recommendations to the Court. Various other parties have made submissions.

"The Court will consider the Treasury’s and other submissions and rule on the payments to be made to CPS in due course."

*UPDATE: This story has been updated to include National Treasury's media comment.

Read more on:    sassa  |  cps  |  social grants  |  grants

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