Lack of political will and fear of social discontent are about to bring the state giant Bulgarian Posts close to financial collapse. Last week, the government apparently decided to make legislative changes affecting the number of branches providing universal postal services, so there is no such posts in villages with fewer than 800 people. Just a few hours after the intial announcement, however, under threat of a rising avalanche of discontent, the Minister of Transport and Communications Ivaylo Moscovski changed radically his position.
In practice the government’s decision says that post offices will be opened only in settlements with over 800 inhabitants. If the respective village or neighborhood has fewer inhabitants other forms of service will be provided.
According to the words of Minister Moskovski, no closure of post offices is envisaged. The need for such optimization, however, is more than urgent. The operating loss of Bulgarian Posts last year came to about BGN10 million. What is more, the structure operates in a market that grows every year with a double-digit rate of increase, while private players report ever-increasing profits.
The explanation of the statesmen of this poor performance is that since the beginning of 2011 the state-owned monopoly on so-called reserved area (the lightest letters of up to 50 grammes) was abolsihed. So companies like T-post, BM Express and Econt now compete equally with Bulgarian Posts for the correspondence of state institutions, municipalities and other bodies.
To transfer all the blame on market liberalization, however, is not serious. On one hand, private entrepreneurs have yet to prove themselves as good partners to custommers. Moreover, most agencies and municipalities, as well as individual organizations have long-term contracts for the distribution of letters with the state posts, suggesting that the actual effect of the removal of the restriction may be felt as early as this year. It’s true that because of the entry of new players in the postal sector, Bulgarian Posts are no longer servicing for example the National Revenue Agency and the National Insurance Institute, but it is good to know and what is precisely the reason for that. As paradoxical as it may sound in the supposedly free sector, where firms set prices themselves of their services, state-owned company continues to work with regulated tariffs and its ability to compete with other operators is minimized. So again here one comes across the question of political will and managerial decisions which in this case are largely absent.
Far more important is what happens in the segment of non-universal postal services, which includes courier shipments, hybrid mail (reception of messages submitted in physical or electronic form by sender and their delivery in the form of postal consignments) as well as remittances and money transfers. It is this segment that the competition is fierce and the state enterprise now holds less than 5% of this market. So even though it has the best network in the country and has a huge number of employees (over 11,000 people) Bulgarian Posts remains outside the big game, due to its inability to provide quick and quality services to consumers.
