Treasury, Companies Authority dispute delays post office privatization

The financial report of the postal service for the second quarter will be published this week, and losses are expected.

A woman stands at the counter inside a Israel Post office in Jerusalem (photo credit: REUTERS/Ronen Zvulun)
A woman stands at the counter inside a Israel Post office in Jerusalem
(photo credit: REUTERS/Ronen Zvulun)

A dispute between the Treasury and the Israeli Corporations Authority is preventing privatization of the postal service. The root of the dispute is how privatization should be implemented. 

With current delays, there’s no chance that privatization will be implemented before the end of 2022.

As a result, fundamental issues regarding privatization including financing the privatization plan, developing future regulations concerning the postal service and a recovery agreement costing NIS 1.6 billion, which includes the retirement of 1500 employees in exchange for the transfer of postal service assets to state ownership, aren’t happening, and the Treasury isn’t transferring the funds needed to implement these changes.

What is the dispute about?

The dispute began following the government's decision on July 10 to privatize the postal service in its entirety (100%) and not in two stages. 

 Israel Post postal worker delivers packages on his motorized scooter. (credit: VIA WIKIMEDIA COMMONS) Israel Post postal worker delivers packages on his motorized scooter. (credit: VIA WIKIMEDIA COMMONS)

Director-General of the Finance Ministry Ram Blinkov and Yoav Gerdos, who’s in charge of budgets and works closely with Blinkov, are demanding that privatization be carried out in two stages: first, 40% will be issued on the stock exchange, and then another 60% will be sold to a private investor.

Yet the Director of the Israeli Corporations Authority Michal Rosenbaum and the Accountant-General Yali Rothenberg believe that the stage of issuing 40% of the company's shares on the stock exchange should be skipped, because there’s no chance that investors will buy shares knowing that the company will remain government owned. 

As mentioned, in view of this dispute and since Blinkov’s opinion was rejected privatization has been delayed and funds that the postal service were to receive to promote its business plans haven’t been transferred. Also, regulation intended to ensure the postal service’s business activities in a competitive environment aren’t being enacted.

The postal system is in very bad financial shape. A note of concern was attached to the first quarter reports, and losses of tens of millions of shekels are expected in the second quarter reports which will encompass January-June 2022 and will be published this week. 

The postal service’s chair of its board of directors is Mishal Vaaknin. David Laron was appointed to the position of CEO, replacing Danny Goldstein who retired.