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 Lewis Njoka @LewisNjoka

Postal Corporation of Kenya (PCK) wants the Senate to fast-track the approval for an annual budgetary allocation of Sh1 billion to cushion the firm from the burden of Universal Service obligation.

The Universal Service Fund (USF) is a fund managed under the Communication Authority of Kenya (CA) by the Universal Service Advisory Council (USAC) to facilitate connectivity to unserved and undeserved areas.

All telecom operators in the country are required to contribute 0.5 per cent of their annual turnover to the fund the project with CA topping up the remaining 25 per cent.

On average, telecom operators contribute Sh1.4 billion per year, according to USAC chairperson, Catherine Ngahu.

In a recent report to the Senate Standing Committee on Information Communication and Technology (ICT), the telco requested the committee “to fast-track approval for a minimum annual budgetary allocation of Sh1 billion to cushion PCK from the burden of universal service obligation.”

PCK said this in response to a request by the senate committee on the plans it has to turn around the financial status of the corporation.

Labour committee

For over three years now, the cash-strapped telco has been requesting the national government to allocate it Sh1 billion annually as part of its turnaround strategy.   

In February the National Assembly, through the Labour and Social Welfare Committee, proposed that the communication authority inject Sh1 billion into PCK.

Earlier in September last year, Treasury had approved another Sh810 bailout for the corporation to go towards paying salaries for workers who had gone without pay for over six months.

Communication Authority of Kenya (CA), however, contested the recommendations saying it was not tenable to give PAK Sh1 billion in the near term. 

“PCK needs support as a player in the communication sector yes, but we see it more as a long-term intervention and our five-year plan factors in this support,” said CA Wanjau said.

The Universal Service Fund had collected levies and interests totalling to Sh10.6 billion by March 21 2020, and spent approximately Sh2 billion of this on the phase I of the education broadband project, and phase I of the voice infrastructure project.

Voice services

The first phase of USF targeted to connect 1,000 public secondary schools with the internet and 202 sub-locations in remote areas with voice services.

Phase II will see the fund spend Sh12.35 billion on cellular mobile network infrastructure, education connectivity project, and automation of the occurrence book and crime management system for the National Police Service.

PCK has been experiencing financial challenges for a while now and this saw it announce plans to sack its 2,450 employees September last year.

As of June last year, the telco had accumulated debts totalling to Sh5.9 billion.

In September last year, Postmaster General, Daniel Kagwe projected that the company would make a loss of Sh1 billion in the 20/21 financial year saying financial woes deepened during the five months since March 2020 because of the Covid-19 pandemic.

Currently, PCK is heavily dependent on international mail conveyance which accounts for 60 per cent of the organisation’s annual turnover.