Communications and Digital Technologies Minister Mondli Gungubele on Tuesday said that the R3.8 billion required for the implementation of the SA Post Office (Sapo) rescue plan would be expedited.
Gungubele said the R3.8bn in funding was one of the conditions the Cabinet agreed to when the court granted business rescue as one of the options to save Sapo.
“The department has kick-started engagements with the National Treasury. Now that the rescue plan has been adopted by Sapo creditors, a submission to the government will be made,” he said.
Gungubele, along with joint business rescue practitioners Anoosh Rooplal and Juanito Damons, briefed the communications and digital portfolio committee.
Rooplal and Damons were appointed after Sapo was placed under business rescue in July. The developed business rescue plan was adopted by Sapo creditors on December 7.
Rooplal said they flagged as major Sapo’s financial distress as its insolvency status and that its losses were R19bn as at September 2023.
“Sapo incurred R2.2bn losses in each of 2022 and 2023,” he said.
Rooplal ascribed the revenue declines to technological changes in the industry and Sapo’s “specific factors”, inability to meet customer service standards, unplanned closure of branches and cash flow constraints.
He told the MPs that Sapo had 1 023 branches, of which 894 were active and 129 inactive.
The entity had no money to pay landlords and was in arrears in payment for rent and utilities.
“We could see that in aggregate most of the branches were in a loss making. We have to reduce the branch footing to 600.”
He explained that when the R3.8bn was received for the business rescue process, they would pay 2 000 creditors, including statutory bodies such as the SA Revenue Service and medical aid schemes as well as the employee salaries.
The R3.8bn will also be spent to invest and enhance capital infrastructure that has been neglected over 10 to 12 years.
The investment will see R1bn spent on IT upgrades, R550 million on logistics and fleet and R325m on mail processing.
Rooplal said some of the money would be used to automate some mail processing and eliminate duplications.
He told the MPs that they would engage the union on retrenchments to ensure they were done responsibly.
“What we did highlight is that if this goes beyond March and there is undue delay, this can increase the risk to the rescue plan we have on the table.”
Damons said they had ring-fenced R600m for retrenchment packages to be paid over a 12-month period.
But, EFF MP Sinawo Thambo said the business rescue plan was an obituary of the Post Office.
“There is no prospect that Post Office will recover from what is essentially crippling it,” Thambo said.
He also spoke against the retrenchments and closure of branches.
“You should have told us in a briefing note that Post Office will be closed because it is inevitable with what we have been presented here.”
Thambo also said there was no appreciation of Sapo as providing a public service but it was viewed as a commercial entity.
DA MP Natasha Mazzone noted with concern that retrenchments formed part of the business rescue plan and those to be retrenched would not only lose jobs, but won’t have access to medical aid and pensions.
Mazzone also noted that the National Treasury had emphatically said there is no more money left to give for future bailouts.
“I find it disingenuous that the minister or the director-general are in talks with Treasury. What talks after MTBPS and Treasury made it clear there is no further money to give out unless something untoward or something suspicious or sinister is happening because Parliament has voted how budget will be re-disbursed and Post Office is not included in the re-disbursements?” she said.
ANC MP Lesiba Molala said the business rescue practitioners gave their analysis of Sapo based on what they found and what should have happened.
“We should be working on strengthening the way forward in terms of business rescue ... All of us want to save the Post Office,” he said.
Gungubele said the business rescue plan was a great milestone and would go a long way to turn around Sapo and enable it to compete with other entities in the digital space.
Gungubele said Sapo remained an important institution in the country’s postal service network nationally and in the SADC region.
“We remain committed to build a Post Office of Tomorrow which provides quality, affordable and accessible service to the people of our country.”
On retrenchments, he said: “On our side as the department, we urge that everything must be done to protect jobs as much as possible during this process.”