Criticisms Highlighted by the Accounts Chamber Regarding the "Office of Russia" Position
In 2023, an audit of the Russian Post state company was initiated, shedding light on a year's worth of financial losses totaling 24.5 billion rubles. The Federal Treasury's announcement came after State Duma committee meetings and concerns from other government officials about the company's operations.
Valentina Matviyenko, Federation Council Speaker, described the financial situation of Russian Post as "very dire," citing a "hole" in its budget. In response, the company's CEO, Mikhail Volkov, acknowledged the "extremely challenging" financial situation but emphasized the company's commitment to its social functions in the regions.
According to the Accounts Chamber's report, the modernization plan for 3,300 postal offices in rural and remote areas, funded by a 17 billion ruble budget investment from 2021 to 2025, was implemented inefficiently. Only 723 postal offices were modernized, and there's no list of postal offices to be modernized by 2030. This creates risks of not fulfilling the presidential order to modernize at least 25,160 postal offices by 2030.
The report also criticized the "Russian Post" Development Strategy until 2030, adopted in 2021, for lacking a strategic planning document defining long-term postal communication goals. Contrary to its charter's main goal of generating profit, Russian Post's social and state goals involve ensuring citizens' rights to information.
After the company's transformation into a joint-stock company, some social functions have been carried out inefficiently. Between 2020 and 2023, the number of post offices operating in reduced hours nearly doubled, and the number of mailboxes installed outside post offices decreased by more than half. As of January 1, 2024, one in six post offices (over 6,000) was temporarily closed due to staff shortages, unprofitability, and lack of premises.
The SP report also addressed management issues, revealing that the company's organizational structure was revised 25 times in five years, accompanied by a 65% increase in the number of advisors in the management apparatus and a 48% increase in their salary fund. The leadership turnover is rapid, with the deputy general director position having 53 occupants since 2020, and an average tenure of just over a year.
Management of finances at Russian Post is deemed inadequate, as the company does not conduct necessary economic assessments when attracting borrowed funds and has no limit on borrowings. Furthermore, the state company does not control the ratio of net debt to EBITDA and, as a result, debts have increased by 70% since 2020.
The Accounts Chamber is also dissatisfied with how Russian Post manages its property. A significant portion of real estate is on average 70% worn out, and around 2,000 property objects (fully or partially vacant) are not used for profit generation. The poor management of the post office at Paveletsky Station, with an area of 23,600 sq.m., is only 15% occupied.
The audit resulted in recommendations to address these issues, such as establishing a limit on debt obligations, improving workforce training, and localizing critical technologies to mitigate sanction impacts. Copies of the report were sent to the government, the presidential administration, and both chambers of parliament.
- The unprofitability of Russian Post, as highlighted by the Accounts Chamber's report, has led to concerns about its financial situation, with the company facing a debt increase of 70% since 2020.
- In an effort to address this, the report has recommended that Russian Post establish a limit on debt obligations to improve its financial management.
- The report also suggested the need for improved workforce training and localizing critical technologies to reduce the impact of sanctions on the business.
- By 2030, Russian Post has a significant number of postal offices that are yet to be modernized, as only 723 out of 3,300 postal offices were modernized from a 17 billion ruble budget investment from 2021 to 2025, risking the inability to fulfill the presidential order.
