Media Statement: Communications and Digital Technologies Committee Calls for Ministerial Intervention in South African Post Office (SAPO) Business Rescue Process

The Portfolio Committee on Communications and Digital Technologies is gravely concerned about the business rescue process at the South African Post Office (SAPO) following a presentation to the committee yesterday, 17 September 2024.

The Business Rescue Practitioners (BRPs) appeared before the committee to provide an urgent update on mitigation strategies to avoid the so-called Day Zero scenario. Day Zero – set for 30 October 2024 – is understood to be the day when the ailing national postal services are expected to run out of cash reserves required for their operations.

The presentation covered the progress to date with implementing the business rescue plan and proposed mitigation measures being considered by the BRPs, who have assumed full management and operational control of the company. The committee noted some of the BRPs’ work to achieve short to medium-term objectives, including reducing approximately R1.2 billion in annual employee costs, right-sizing the entity and paying dividend awards of 12 cents in the Rand to all pre-commencement current creditors.

The committee has, however, expressed its dissatisfaction with the presentation, reaffirming its position that the BRPs have failed to present a cogent business case for the SAPO’s long-term sustainability in line with their statement of intent at the start of the business rescue proceedings, to ensure “the stabilisation, survival and future-proofing of the SA Post Office”.

The committee believes that the BRPs were appointed to implement a three-legged mandate of rescuing, stabilising and ensuring the long-term commercial viability of the Post Office. In the briefing to the committee, the BRPs said nothing about the plan to future proof SAPO, except to say that they needed R3.8 billion from the fiscus. According to the BRPs, this money is used to pay the final tranche of the retirement packages to employees, meet obligations with payroll creditors and use the remainder for capital and operational expenditures.

The committee believes that to access the desired cash draw down from the fiscus, the business rescue process should clearly demonstrate the path to viability and sustainability beyond this requested bail out. Failure to do so is to absolve the BRPs of their obligation to the organisation.

Consequently, the committee has called on the Minister of Communications and Digital Technologies, Mr Solly Molatsi, to urgently establish a Ministerial Intervention Team (MIT) to work with the Business Rescue Practitioners and the National Treasury, amongst others, to develop a strong business case to save and restore the Post Office as a reinvigorated going concern. The MIT should, amongst other actions, urgently convene stakeholders and other industry players in the postal services, courier and e-commerce sectors to engage on proposals towards strategic, sustainable and value-creating private sector partnerships. Due consideration should also be given to exploring opportunities to leverage SAPO’s extensive property assets for retail, residential and student accommodation purposes.

To support the process, the committee shall also engage with its counterparts in Parliament to aggressively enhance support for the SAPO by the rest of government. Furthermore, the committee shall also seek a joint meeting with the Standing Committee on Finance to explore any available measures that can be put in place to salvage the situation. The committee firmly believes that no effort must be spared to rescue and revive the South African Post Office as a vital state institution with an important mandate to connect people to one another and to the government in a fast-evolving technological age.

Distributed by APO Group on behalf of Republic of South Africa: The Parliament.