The Post Office wants the R3.8 billion it was promised

Deputy Minister of Communications and Digital Technologies Mondli Gungubele says the government has committed to funding the South African Post Office’s (Sapo) business rescue “for no less than R3.8 billion.”

Speaking to SABC News, the deputy minister acknowledged that the Post Office had already received a R2.4-billion bailout in recent years.

However, he noted that the amount was allocated without government anticipating Sapo’s potential liquidation.

“Government committed to fund that rescue for no less than R3.8 billion. Already at that time, R2.4 billion had been allocated not in anticipation of liquidation,” said Gungubele.

He explained that the government approved the R2.4 billion bailout when Sapo presented its strategy for the “Post Office of Tomorrow”.

“Both these were allocated towards Sapo for rescue. The reason the business rescue practitioners have been able to actually run the Post Office is because of the R2.4 billion,” said Gungubele.

“R3.8 billion is what is still being discussed with Treasury, which the government made an undertaking to do.”

In early September 2024, the Post Office’s business rescue practitioners (BRPs) said the entity requires an injection of R3.8 billion to fully implement its business rescue plan.

They warned that if Sapo doesn’t get the funds, it will run out of money by October 2024 and may need to be liquidated.

This was revealed during a presentation before the Portfolio Committee on Communications on Tuesday, 3 September 2024.

Speaking to 702, South African Postal Workers Union general secretary David Mangena said he believes the Post Office can be resuscitated if it receives the funds the government promised.

He explained that during the implementation of business rescue processes at Sapo, a court order specifically mentioned the R3.8 billion allocation for the Post Office.

“In that court order, the R3.8 billion was mentioned. So, our understanding was that it was an order of the court,” said Mangena.

“They can’t say today that now the BRPs are raising issues to say they are running out of money. This is something that was supposed to be done in the first instance.”

“We see progress in the Post Office since the coming of the BRPs. The Post Office can be resuscitated,” he added.

The Post Office was placed into business rescue in July 2023. Business rescue practitioners Juanito Damons and Anoosh Rooplal were appointed to develop a rescue plan for the state-owned entity.

Sapo received R2.4 billion in funding from National Treasury as part of its entry into business rescue. The Post Office used the money to cover its operations, settle debts, and pay salaries and severance packages.

It has now applied for additional funding from Treasury to carry out its business rescue plan.

The business rescue plan has seen the Post Office retrench 4,875 of the 11,083 employees employed at the state-owned entity.

The BRPs say two of the three retrenchment package payouts have been processed, with the third scheduled to be paid in November 2024.

They also identified 366 branches that will be shut down, reducing the network of Sapo branches from 1,023 to 657.

The BRPs said they made these tough decisions with Sapo’s universal service obligation in mind.

“An important reminder is that the reason and efforts made to restructure this business are based on the fact that the Post Office has a social mandate that requires it to serve all South Africans,” said Rooplal.

“While city dwellers have the means to pay for and access communication networks, South Africans living in rural areas have fewer choices.”

He said urban hubs won’t be excluded from Sapo’s restructuring. However, the entity will focus on providing Wi-Fi, printing, scanning, and training services in townships and rural areas.