Possible privatization or the establishment of public-private partnership of the Post of North Macedonia, for which there will be a feasibility study conducted over the upcoming period, will not initially affect the reduction of the price of universal services. However, this process, according to the authorities, is supposed to improve work quality and to increase the service portfolio of the national operator so that it acts by the same market rules as private operators. This would enable more profitable work of the state company that’s been noting losses.
The government has announced the Post will undergo restructuring through changes to the Law on Postal Services, enabling the sixth delay of the full liberalization of postal services. The Post will retain exclusivity in the price of reserved postal services encompassing the reception, delivery, and handoff of correspondence packages such as letters and postal cards, and direct post shipments up to 50 grams. Private postal operators have the right to do reserved postal services, for 2.5x the price given by the individual license carrier to secure reserved packages.
“Initially, the postal privatization won’t affect universal service prices, i.e. shipments up to 2 kg and others up to 10 kg, that have to fulfill criteria defined by the Law on Postal Services – accessible prices, based on expenses, transparent, determined on a non-discriminatory basis, and equal to all users across the whole territory. For each change in these prices, the Post of North Macedonia must obtain approval from the regulator. If the provider of the universal service further changes the portfolio of its services or increases/decreases work costs for justified reasons, they can change the prices of the universal service if given approval by the regulator,” Biljana Avramovska Gjoreska, head of the Post Agency tells MIA.
The service prices, which are outside of universal service, are not approved by the Agency, meaning that they are determined on the free market. These prices are determined by the providers of postal services themselves, and are influenced by the market mechanism of supply and demand, characteristic of the free market competition.
The draft changes to the Law on Postal Services, which stipulate another delay of the full liberalization of the postal market, say that the national operator hasn’t supplied a special accounting system that will provide a detailed display of service expenses, basing the pricing policy on assumed expenses. The law also says that the lack of such a system means the inability to use the compensation fund as a right to compensation for net expenses that arose with securing universal services if the universal postal service provider proves that the expenses are higher than the profit made by the securing of the universal service in the previous year.
As in previous explanations concerning the liberalization delay, the newest one also says that the Post of North Macedonia is characterized by a “cumbersome” system that disables and slows down the already long and slow reorganization process towards work improvement, adequate competition management, and its easier adapting to work in accordance with all rules of entrepreneurship and work in a free market economy. There is space for the national operator to invest in the modernization of the postal network in the creation of new services that will contribute to its sustainability through providing postal services of higher quality for citizens.
The Postal Agency is tracking the financial situation of the universal service provider, through annual reports it’s obligated to deliver to the regulator. They clarify that the tracking of the financial situation and reports of the Post of North Macedonia serves to determine whether the universal service provider subsidizes other services with the profit it secures from the universal service. They remind us that they’ve been talking about the need to implement a special accounting system that would secure a detailed, realistic image about the expenses and overall financial operating of the Post which would contribute to its work to become more successful and effective, for years.
“The Postal Agency believes that the Post of North Macedonia should strategically change the focus of its work, accentuating bigger participation in the package market as the quickest growing segment of postal traffic. Namely, private postal service providers have a substantial primacy, 90:10, in packages in internal traffic. The new market competition brought new, innovative services and technical solutions fitting user needs, in step with new technologies. When companies compete in this way to win over customers, then service effectiveness trumps price. This means that it will take a significant increase in the quality of postal services and increasing the portfolio of services that the universal service provider will provide. The question of how this can all be achieved rests with the owners of the universal service provider. Such a postal market is expected after the monopoly for letters up to 50 grams is finally abolished. We’ve put efforts into this liberalization constantly since 2008,” Avramovska Gjorevska says.
She also points out that the Postal Agency follows legal regulative, having prepared sublegal acts and solutions that must be followed by the universal service provider as well, without consideration of its ownership structure. “We’re constantly working on creating a regulatory ambiance that will guarantee the realization of legal rights of affordable, effective services and quality delivery to the users of the Post of North Macedonia’s services. Within the Twinning Project framework, realized in 2019/2020, the Postal Agency prepared for the regulator’s work in a liberalized market.
“Experiences by the Spanish experts in the project, as well as from the cooperation with all regulatory bodies in Europe, showed that as a result of the inadequate 2010 solution, the Post of North Macedonia was denied the possibility to use state aid, which was a rarity for just about any national post in Europe. Namely, nearly every European country pays substantial money for state aid, compensation of net expenses, to their national providers of universal service, regardless of them being partially privatized or fully state-owned. The Postal Agency is firm about its initiative and idea which, on many occasions, has been said that it has to be adopted in the next change of the Law on Postal Services. In this context, we’ve highlighted on numerous occasions that we’re working on adaptations and additions which will suggest the aforementioned solution to the Law on Postal Services that will be delivered to the Ministry of Transport and Communications,” Avramovska Gjorevska says.
She says that the COVID crisis showed how truly necessary the postal services are for the basic functioning of national economies, i.e. that the national postal industry is one of the keys to maintaining the economy by using the postal network as a critical infrastructure of the state.
“The halt of commercial flights and travel restrictions affected the Post of North Macedonia’s international postal services, because there are no cargo flights to our country either. We are sincerely hoping for these conditions to be overcome and solved, in interest of the users’ needs for uninterrupted providing of the universal service to and from the country. We may not have been talking about this today if, over the past 10-12 years, the country had insisted on the drawn up policies and reformed the post, which is still 100% owned by the state,” the head of the Postal Agency says.
The recently published report by the European Commission, the postal market in this country is partially open and that the full liberalization of the market of postal services is once again delayed until January 1, 2021.
“The universal service provider – Post of North Macedonia covers 90% of the postal markets. In 2019, 43 companies, licensed providers of various services with different geographical coverage worked on the market. Despite the large number of postal service providers, the universal service provider is very significant on the postal service market in North Macedonia, given that they make 90% of the market. There is a necessity for a stable universal service provider, especially in today’s cases when online orders are increasing,” the report says.
Representatives from the private postal sector highlight that it’s necessary to liberalize the postal market, a process that isn’t tied to the planned privatization or the public-private partnership, given the fact that one of the conditions for EU negotiations is to abolish state monopolies.
“Another matter is how much are the state post and private postal operators capable of conducting this on the field, considering staff, readiness, knowledge of postal operators, their location in all parts of the country where regular postal service should be set up, and availability to citizens. These are issues that must be solved so that the liberalization of the postal market challenge is answered, which will happen, despite the many delays,” Aleksandar Miloshevski, representative of a private postal operator tells MIA.
“The liberalization itself will regulate postal services in a reserved area, which will include letters and shipments up to 50g, and it this part there may be expansions, but the main accent of the liberalization will be in expanding the reach of private operators by offering a competitive price and quality which we believe should affect the market opposite of the state postal service,” Miloshevski adds.
The selection of the privatization or public-private partnership model, as he judges, should be a long-term process in which the state will decide, from an economic and social aspect given the large number of employees and select the correct model based on that. Whatever model gets chosen, it will affect the improvement of the quality of the service given by the state, and by the private operator or the public-private partnership in the future.
“There should be no rushing and making hasty decisions, we need an open debate and discussion to find the right model to solve the condition of a state company that, based on results, is not doing the best financially. In this process we believe that the state will find a way to hear the voice of private postal operators too,” he continues.
As the government announced, the model that gets chosen to restructure the company should enable a transition from non-cost-effective to cost-effective working.
The Deputy PM of Economic Affairs Fatmir Bytyqi, who coordinates the team for planned restructuring of the Post, said that a decision around the future of this state enterprise would be made in the first or second quarter of next year.
“The selected model is a public-private partnership or an eventual privatization. The process has just begun. I believe that we will have a final decision in the first or second quarter of 2021,” he stated.
Slovenia, Austria, Germany and Poland were listed as successful examples for postal management.
All universal service providers of the postal market in our region are state-owned: Serbia, Croatia, Montenegro, Albania, Greece, Bulgaria, Bosnia and Herzegovina, whereas the postal market remains non-liberalized only in three countries, including North Macedonia, Serbia, and BiH.
