Companies

Treasury approves Sh800m to bail out troubled Posta

posta

PCK workers collect letters at the General Post Office in Nairobi. FILE PHOTO | NMG

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Summary

  • ICT Secretary Joe Mucheru says the money will be transferred to PCK to pay salaries and arrears for workers who have gone without pay for the last six months.
  • Mr Mucheru blamed the outbreak of Covid-19 pandemic which grounded international flights for the delay in payment of employees’ wages.
  • He said Covid-19 significantly reduced internal mail haul given that PCK business depends on passenger flights as opposed to cargo planes.

The Treasury has approved a Sh810 million bailout to State-owned Postal Corporation of Kenya (PCK) which has not paid salaries for its employees since March.

ICT Secretary Joe Mucheru says the money will be transferred to PCK to pay salaries and arrears for workers who have gone without pay for the last six months.

Mr Mucheru blamed the outbreak of Covid-19 pandemic which grounded international flights for the delay in payment of employees’ wages.

He said Covid-19 significantly reduced internal mail haul given that PCK business depends on passenger flights as opposed to cargo planes.

“When the airports were shut down beginning the month of March, everything at PCK came to a standstill.

“But with the opening of the airspace, PCK will generate revenues to meet its internal obligations such as payment of salaries,” Mr Mucheru said.

He was responding to a petition filed by PCK employees who asked the National Assembly through the departmental committee on Information, Communication and Technology to probe the corporations’ failure to pay salaries.

In the last 10 years, Internet service providers and the entry of giant telco Safaricom, have drastically cut reliance on Posta for the physical delivery of letters.

The parastatal’s fortunes have dwindled following an uptake of email, calls, SMS and social media which has resulted in a major decline in mail correspondence, especially among individuals.

The number of letters posted locally in the three months to March declined by 19.3 per cent to 8.5 million from 10.5 million letters the quarter ended December.

Esther Koimett, the ICT principal secretary said a Cabinet memorandum has been developed to restructure theloss-making parastatal and transform it as an emerging e-commerce business.

“We are undertaking reforms at PCK. The ministry will request government facilitation to upgrade infrastructure network, debt restructuring, staff rationalisation and capital injection for PCK among others” she said.

Ms Koimett said PCK losses mount to Sh6 billion and the ministry together with the National Treasury which is the sole shareholder of PCK is working towards debt restructuring and rationalisation.

Post Master General Daniel Kagwe told MPs that PCK loses had accumulated to Sh5.9 billion as at June 2020 and therefore the corporation cannot meet its obligations.

To reverse the declining performance, Mr Kagwe wants the government to enforce regulation protecting PCK reserved services of Mails weighing up to 300grams and Letter Box services.