Simo Lushaba.  Picture: SUNDAY TIMES
Simo Lushaba. Picture: SUNDAY TIMES

THE South African Post Office (Sapo) is losing about R1.3bn-R1.5bn a year because of breaches of the regulation that reserves a segment of the postal market for its exclusive operation, MPs heard on Tuesday.

Recovering this amount would allow Sapo to break even as it had projected a loss of R1.3bn in the 2014-15 financial year.

In terms of a regulation of the Independent Communications Authority of SA (Icasa), post and parcels of less than 1kg are reserved for Sapo in order for it to generate sufficient revenue to enable it to provide services in underserviced areas.

Sapo was placed under administration in November last year because of financial and other problems.

Its administrator Simo Lushaba told members of Parliament’s telecommunications and postal services committee that the Icasa regulation was not respected by government and private sector entities and had contributed to the under-recovery and losses suffered by Sapo.

Discussions were being held with Icasa to deal with the problem.

Mr Lushaba gave a frank assessment of the company, saying it was suffering from cash flow problems and needed further long-term funding. Revenues had not recovered from last year’s strike as customers had found alternatives.

Sapo was having difficulty in meeting its cash outflow requirements and there was a backlog of outstanding debt.

He said that Sapo had requested permission from Treasury and the Department of Telecommunications and Postal Services to increase its borrowings by R1.25bn. This would be backed by the state guarantee of R1.67bn issued in December last year.

"Binding term sheets of R1bn have already been obtained from interested banking institutions," Mr Lushaba said.

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