Business Czech Post seeks 1.7 billion in compensation for loss-making services

01-09-2014 14:29 | Jan Richter

The state-owned postal firm Czech Post is seeking 1.7 billion crowns in state compensation for losses incurred through unprofitable services it is required to provide by law, the daily Hospodářské noviny reports. Part of the compensation should be covered with contributions from Czech Post’s competitors according to existing law. But they complain the sum is exaggerated, and say the payments would put their businesses at risk.

Photo: Filip JandourekPhoto: Filip Jandourek Czech Post calculated that last year, it lost 1.7 billion crowns, or around 80.5 million US dollars, through unprofitable postal services it is required to provide by legislation governing the state-owned firm. These so-called universal services include maintaining hundreds of branches in remote areas as well as some basic services such as the deliveries of ordinary, recorded and insured mail, parcel deliveries and mail services for people with visual impairment.

The compensation will be covered from a special fund whose sole purpose is to cover the losses incurred through the universal services offered by Czech Post. The fund, which is yet to be officially set up, will collect contributions from all players on the postal market including private companies which have entered the market since it was largely opened up to competition in 2013. Their contributions should correspond to the firms’ market share.

Czech Post estimates that around 80 percent of the loss would be covered by the state-run firm itself. However, its privately-owned competitors should pay around 340 million crowns into the fund, according to the report. This has raised the ire of several postal firms operating in the Czech Republic, also because Czech Post recorded a profit of some 350 million crowns last year.

Under calculations by Czech Post, the firm DPD would have to contribute some 80 million crowns to the fund. But DPD CEO Daniel Mareš told the paper this was “absolutely unacceptable”. Another company, Mediaservis, said Czech Post’s losses seemed exaggerated. The firm’s director, Martin Dzúr, told the paper he saw no reason why his company that is loss making should pay to Czech Post which made a profit last year.

The daily Hospodářské noviny reported that the postal marker regulator, ČTÚ, also considered the amount quoted by Czech Post too high, and believed the sum could eventually be almost halved.

The ambiguous process of compensating Czech Post has meanwhile prompted calls for changes to legislation. The Interior Ministry has begun drafting a bill that would grant Czech Post around one billion directly from the national budget. The draft legislation should reach the lower house of Parliament in the coming months, according to the report.

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