JOHANNESBURG - Net1,the parent company of social grants distributor Cash Paymaster Services (CPS), yesterday filed papers with the Constitutional Court, asking South African Social Security Agency (Sassa) to clarify its request for the extension of CPS’ current contract by another six months.

Sassa has applied to the Constitutional Court for a six-month extension of the social grants contract when the current contract ends on March 31.

NET1 chief executive Herman Kotze said yesterday that Sassa wanted the company to continue while phasing-in a new contractor.

“There are actually two new contractors. The first one is the South African Post Office (Sapo), because it has done a deal with the post office to assist them with the payment of grants. Second, there is a tender that has gone out because Sapo has told Sassa that it cannot do cash payments. It does not have the infrastructure,” said Kotze.

He said the company wanted the Constitutional Court and Sassa to clarify what was expected of CPS in the six months. “We are not opposing the application for an extension. We understand that there cannot be a disruption or any issues around the payment of grants. We will do whatever we can, within our powers and the Constitutional Court framework, to assist with a transition that ensures that there is no disruption,” he said.

He said grants disbursement at the country’s 10000 paypoints was a logistical nightmare. The 2.5million beneficiaries get their money at the paypoints. “You have cash that needs to be distributed over large distances, with the security and logistical issues that go with that,” he said.

In terms of the current contract, Sassa pays CPS R1.8billion a year, excluding VAT. South Africa has 10.7million social grant beneficiaries.

Meanwhile, Kotze said CPS was interested in the new social grants payment contract when its current contract comes to an end. But before doing so, the company wants the Constitutional Court to rule on whether it was eligible to bid for Sassa contracts. This follows a misunderstanding between CPS and Sassa on the matter. In papers to the court, CPS has argued that Sassa has misinterpreted a 2017 Constitutional Court order, which ruled that CPS’ contract was invalid.

In its March 2017 order, the Constitutional Court declared that Sassa and CPS had a constitutional obligation to ensure payment of social grants to grant beneficiaries from April1 last year until an entity other than CPS is able to do so.

“In our mind, it is not possible that the court meant that we cannot bid, because they made it clear that we were not at fault for the invalidation of the contract. Sassa did not follow the right processes. There is no reason why we should be penalised,” he said.

He said the company was optimistic that there was enough time for the Constitutional Court to rule on the matter and for it to put together a bid by month-end.

The closing date for the new tender is February 28. Kotze also said that the company was hopeful that its claim of more than R1bn from Sassa for breach of contract would be finalised before the end of this year.

Net1 Technology shares gained 2.16percent on the JSE yesterday to close at R118.

- BUSINESS REPORT