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Plans afoot to raise R4 billion bailout for SA Post Office

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Plans are afoot to ensure that the South African Post Office is allocated the R3.8 billion its business rescue practitioners have said is crucial for its recovery.

The minister of finance told Parliament last month that 235 more post office branches were set to close their doors in 2024, with more subsequent retrenchments as part of the business rescue process. File picture

PLANS are afoot through either a special dispensation from the fiscus or partnerships in logistics, e-commerce, disposal of property or investments in information technology systems to ensure that the South African Post Office (Sapo) is allocated the R3.8 billion its business rescue practitioners have said is crucial for its recovery.

Parliament’s portfolio committee on communications and digital technologies was told by the department’s Deputy Minister, Philly Mapulane, and director-general Nonkqubela Jordan-Dyani that the government was pulling out all the stops in ensuring the business rescue process was funded the amount, which is in addition to a R2.4bn allocation last year.

In response to pointed questions by DA MP Natasha Mazzone on why the Minister of Communications and Digital Technologies persisted in meeting with Finance Minister Enoch Godongwana for the additional funding, when the government had made it plain there was no possibility of further bailing out Sapo, Jordan-Dyani said the department had now prepared for a follow-up meeting to present the funding proposals.

“There has been such special dispensation in the past. The Minister of Finance has called on us to explore various options including partnership avenues in the business rescue process. At this juncture the most important issue is the funding, the disbursement and the time period to implement the plan. There is a follow-up meeting at which we will unpack the funding implementation plan,” Jordan-Dyani said.

Committee chairperson Boyce Maneli echoed the concerns about what the alternatives would be if either the envisaged partnerships did not pan out, or if the fiscus could not support the rescue process.

Mapulane said the money had to be found as the continuity of the business rescue process hinged on it for the payment of retrenchment costs, paying creditors’ dividends, as well as investing in the repair and modernisation of assets.

Godongwana last month told Parliament that 235 more post office branches were set to close their doors in 2024, with more subsequent retrenchments as part of the business rescue process.

He said the business rescue practitioners, Anoosh Rooplal and Juanito Damons, had not released the specific list of the units to be affected in the Free State and North West, followed by North Gauteng, Limpopo and Mpumalanga.

The business rescue entails retrenching 6,000 of the company’s 11,000 employees and closing of more than 400 loss-making branches.

The business rescue case assumes that the Post Office will receive R2bn of the R3.8bn in 2025 and the remainder in 2026.

The plan envisages achieving more than R1bn a year in savings from reducing the wage bill, coupled with a decrease in other operating expenses, which should push Sapo into an operating profit by 2027

According to the business rescue practitioners, Sapo’s total operating cost base exceeded 200% of revenue, with “ageing IT infrastructure and data centre infrastructure last updated in 2012, inefficient mail processing equipment, which is past its use of life, and unreliable logistics fleet, which is hindering its ability to meet the needs of its customers in a timely and qualitative manner.”

– BUSINESS REPORT

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