Unveiling the Woes of "Russian Post"
Issues Identified in the Role of "Russia's Postal Service" by the Accounts Chamber
Yo, here's the lowdown on the State-owned mammoth, "Russian Post". In 2023, the Federal Treasury, following their own audit, disclosed that the company lost a whopping 24.5 billion rubles over a year. This, after numerous authorities had already raised concerns about its shaky operations. And when asked about the financial situation, the CEO, Mikhail Volkov, admitted it was complex but affirmed that the company was still delivering its social responsibilities in the regions.
Now, with the Accounts Chamber's audit lasting a year and a half, we've got some fresh insights. The main gripe, apparently, is that the funds allocated for modernizing 3,300 rural and remote post offices from 2021 to 2025 were inefficiently used. In just two years, only 723 post offices were modernized, and there's still no list for modernization by 2030. Yikes, that's a mishmash, right there!
State Duma has its concerns about a key document governing "Russian Post", the Strategy for the Development of Russian Post until 2030, which was adopted in 2021 but hasn't been reviewed since. The auditor, Danil Shilkov, suggests that there's no strategic planning on the table for long-term goals.
Additionally, the main goal of the state company, according to its charter, is to generate profit. However, this contradicts the social and national goals of Russian Post, ensuring citizens' rights to freely receive, distribute, and transmit information, as Shilkov points out.
Ever since the transformation of Russian Post into a joint-stock company, some of its social functions have been performed inefficiency-wise. The number of post offices operating in reduced hours almost doubled, while the number of postboxes installed outside post offices decreased by more than half. As of January 1, 2024, one in six post offices was temporarily closed due to understaffing, unprofitability, and lack of facilities.
Chaotic Management
The State Duma report sheds light on the convoluted management system of Russian Post. It reveals that the organizational structure of the state company has been revised 25 times in five years, resulting in three general directors and a 65% increase in the number of advisors in the management apparatus. These management shake-ups have resulted in a rapid turnover, making it challenging for consistent and continuous decisions. Furthermore, the board of directors hasn't been fully functional, having overlooked key documents such as personnel policy and labor remuneration in Russian Post.
The finance department didn't fare much better in the eyes of auditors. The audit found that Russian Post doesn't conduct necessary economic assessments when it takes on debt, and there's no limit set for borrowing. Moreover, the state company doesn't control the ratio of net debt to EBITDA (earnings before interest, taxes, depreciation, and amortization), with the planned value for 2024 being 69.6, while a safe value is thought to be no higher than 3. Consequently, Russian Post's debts have skyrocketed by 70% since 2020, reaching a staggering 128.3 billion rubles.
Things are just as bad when it comes to property management. Russian Post's real estate, on average, is 70% worn out, and around 2,000 property objects (fully or partially vacant) are not utilized for profit generation. It's mind-boggling, isn't it?
The Proposed Solutions
The Accounts Chamber has proposed a series of measures to address these issues, such as appealing to the Prosecutor General's Office to respond to the detected violations. They also recommend joint work by the Ministry of Digital Development, "Russian Post", and other postal operators to develop and submit a strategic planning document for the development of postal services by 2030. Plus, they want to draw up a list of post offices to be modernized in the next five years.
The plan also includes the creation of directives to cap debt obligations and a maximum value for the "Net Debt / EBITDA" indicator for the state company. Lastly, the Ministry of Labor and the Social Fund of Russia are expected to prepare amendments to the legislation for the payment of compensations to employees who haven't received their pensions and social payments on time.
On a brighter note, the Accounts Chamber's audit suggests that Russian Post has made progress in some areas, like a 35% increase in labor productivity and a return to operating profit. So, it's not all grim, but there's still a long way to go! 😉
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The chaos in the financial management of "Russian Post" is evident as the company doesn't conduct necessary economic assessments before taking on debt and lacks a limit for borrowing. Moreover, the poor management of the company's property portfolio is apparent, with 70% of real estate being worn out and around 2,000 property objects not utilized for profit generation.
In the realm of business and finance, it's crucial for companies, especially state-owned ones like "Russian Post", to have effective strategies for managing their debts and properties. However, the current situation at "Russian Post" indicates a need for improvement in these areas.
