The South African Post Office is set to lose R2.1-billion this financial year and needs clarity on its mandate from the government if the struggling entity is to right itself, the National Treasury told MPs on Tuesday.

"A lot needs to be done in terms of repositioning the Post Office. The shareholder needs to assist the entity in terms of its mandate, what the Post Office is actually meant to achieve," the Treasury's chief director for SOE oversight, Ravesh Rajlal, told Parliament's standing committee on appropriations.

Rajlal said the Post Office had been expected to register a financial loss of around R177-million for the current year before the Covid-19 crisis worsened the outlook dramatically. Last year, the Post Office lost around R1-billion.

He said the entity posed a particular conundrum because, unlike many other State-owned enterprises, it could not be placed under business rescue or liquidation in terms of its founding act.

Rajlal added that administration might be an option, "though obviously we don't want to go down that road".

Rajlal said the root of the problem was the Post Office's seeming inability to implement turnaround plans that have been tabled.

"The main issue is that the Post Office has failed to implement its various turnaround plans… the Post Office had not really implemented its turnaround plans over the last 12 years.

He said had a turnaround strategy been in place, the entity would have been better able to weather the global health crisis, and cautioned that instability at management level compounded its problems.

"There is no real permanent management team, so there really has been no accountability in terms of the poor performance of the turnaround plans."

The remarks come amid tension between Communications Minister Stella Ndabeni-Abrahams and the Post Office board, with former chairperson Colleen Makhubele taking the minister to court to challenge her axing from her post.

Over the past 12 years, R11.6-billion in support has been paid over to the Post Office.

Rajlal said the Post Office has asked for R4.9-billion in supplementary funding to handle unforeseen losses that accrued as a result of the Covid-19 pandemic.