Cape Town – Cash Paymaster Services has in an affidavit to the Constitutional Court said it was asking a 6.6 percent fee increase to continue paying grants to millions of welfare beneficiaries for the next two years.
It would see the company earn R4.656 billion for the period, CPS director Nunthakumarin Pillay said in the papers filed on Thursday.
The Constitutional Court directed CPS to file a supplementary affidavit with a breakdown of its demands after its legal counsel, Andrew Cockrell, responded to a question from Chief Justice Mogoeng Mogoeng that he did not have the figures at hand to explain how much more it proposed charging per grant.
Pillay said the administration fee per grant would, based on this lump sum, be R17.52 for the first year of the contract and R18.68 for the second year.
The calculation is based on a two-year consumer price index forecast and an increase in the number of grants to be paid. He said the company had based its calculation in this regard on a three percent increase in welfare beneficiaries forecast in the 2017 national budget.
CPS has been charging R16.44 per grant and, according to the affidavit, had earned R2.06 billion from the contract in the past financial year. Pillay said the company could not factor in potential savings that could be achieved when it began winding down some of its operations in preparation for another entity to take over grant distribution "as there is no phase-out plan" yet.
Nor would it accept that its fee be calculated according to the actual number of grants that it paid. It was demanding a lump sum because "certainly the back office IT infrastructure would have to be maintained in its entirety" regardless of the number of recipients.
He said CPS was prepared to contract for a period shorter than two years, and in this instance it would submit its price demands to the auditor-general. The Constitutional Court will on Friday morning hand down judgment in an application by the Black Sash Trust in a bid to resolve the crisis brought on by the avowed failure of the South African Social Security Agency's inability to take over grant payment in April, as it had undertaken to do.
The Black Sash has asked the court to reinstate the court's oversight role in grant distribution. Freedom Under Law, meanwhile, has applied to intervene in the case, and argued that CPS should not be allowed to make a profit if its services were retained.
The rights group told the court it held this view because CPS's current contract was flawed by tender irregularities, though it had been allowed to run so as not to interrupt grant payments. CPS CEO Serge Belamant has rejected this, saying bluntly that the company worked for profit.
Speaking to reporters outside court on Wednesday, he added that the South African government had a stark choice between retaining CPS's services or employing mail pigeons to deliver grants to millions of beneficiaries after its contract runs out on March 31.
On Thursday, CPS's holding company, Net 1, issued a statement seeking to clarify Belamant's remarks and apologised for any offence he had caused. "The board regrets any arrogance, perceived or real, by CPS relating to the grant crisis, directed at SASSA, other government bodies or potential solution providers," it said in statement.
"The board is of the view that any of the comments made were meant most sincerely and only with the intention of providing transparency regarding the solution currently provided by CPS and to assist in ensuring uninterrupted service delivery to the 10.5 million grant recipients."
The court has been scathing of Social Development Minister Bathabile Dlamini's handling of the crisis. She has rejected proposals for an alternative distribution system, insisting that only CPS could do the job. President Jacob Zuma on Thursday dismissed calls to fire her.