Opposition parties have condemned the South African Post Office (SAPO) business rescue plan, but the organisation's business rescue practitioners (BRP) say it's the only viable option.

The BRPs briefed members of the Portfolio Committee on Communication and Digital Technologies on Tuesday.

On Thursday last week, SAPO creditors agreed on a business rescue plan that includes 5 000 job losses and the closure of 420 loss-making branches. 

According to the plan, SAPO will receive a R3.8-billion bailout with creditors accepting 12c to the rand, with a further deferred payment of 18c to the rand to payroll creditors.

Post Office business rescue practitioner Anoosh Rooplal said it was a "difficult business rescue process,", but its implementation was crucial for SAPO's survival and continued existence – which had to be balanced with its social mandate. 

SAPO's accumulated losses stood at R19-billion as of September this year, with R2.2-billion losses suffered in 2022 and 2023 and an additional R1.7-billion loss forecasted for 2024. Its expenses exceeded revenue by 200% and staff costs were more than 150% above revenue. 

Despite closures, Rooplal said SAPO branches would be maintained in rural areas. Post Office branches will also remain in all districts. 

He said creditors had considered the importance of SAPO in servicing millions of South Africans when voting on the rescue plan. 

"With the business rescue process, you had three choices. The first one was to keep the South African Post Office running, but you would need R10-billion to pay off creditors and continue to put in R3-billion every year to keep the Post Office operating. The second option was liquidation, where you lose all jobs and branches, and creditors receive 4c to the rand dividend. The last option was the business plan that was put forward," he said.

He said that if the business plan was implemented successfully, the entity could grow its branch network again in two to five years. 

But opposition parties condemned the business rescue plan over retrenchments and closing of branches. 

Speaking at the committee meeting, Economic Freedom Fighters MP Sinawo Tambo labelled it as an "obituary plan" which had "no guarantee of ensuring SAPO would recover in the future".

"I do not think it is feasible to retrench workers with the idea that it will generate revenue. I do not think the [BRPs] or creditors appreciate the Post Office as an entity for public service [...] How are our people going to get their things?" he said.

Tambo also said the recent decision to stop cash payments of grants would be detrimental for South Africans. Earlier this week, it was announced that grant recipients will no longer be able to withdraw cash from Post Offices.

He said: "SAPO is an accessible means for grants. [By not allowing cash withdrawals], we are surrendering grant recipients to bank charges. We are also making it even more difficult for them to receive grants because they now need to spend money to get money, which is already little for them."

Meanwhile, the plan to retrench workers was described as a "bloodbath" by DA MP Natasha Mazzone. She said the loss of jobs would also mean the loss of medical aid and pensions for workers, who will not be guaranteed any job prospects after their retrenchment. 

Mazzone also questioned how National Treasury would allocate additional funds to pay SAPO creditors after Parliament already approved the medium-term budget speech.

"Treasury has emphatically said that there is no more money to give, and no money left for any future bailout. That R3.8 billion has to come from somewhere," she said. 

Bailout money

Meanwhile, Communications Minister Mondli Gungubele welcomed the business rescue process and said the bailout would be expedited by government. 

Gungubele said the rescue plan was a path to a healthier Post Office, which millions of South Africans could benefit from. 

"It is with the plan that SAPO is allowed to live again in the interest of those it needs to service the most [...] The most critical thing is to ensure a viable SAPO that can create even more jobs going forward," he said during the committee meeting. 

When asked about plans for a possible bailout, director-general for Communications and Digital Technologies, Nonkqubela Jordan-Dyani, said the bailout matter was taken to Cabinet, who initially agreed on the R3.8-billion allocation.

She said the department will continue to engage with the Treasury to ensure a special dispensation for the bailout amount and ensure the R3.8-billion is released as soon as possible.