The Messy State of Russian Post: A Breakdown of the Accounts Chamber's Audit
Critique Identified Key Concerns in "The Position of Russia"
Since 2023, the Federal Treasury's concerns about Russian Post's financial mismanagement have come to light, with the company reportedly losing 24.5 billion rubles in a year. The Accounts Chamber, in a long overdue audit, has finally shed some light on the issues plaguing the state-owned company.
Failed Modernization Efforts
From 2021 to 2025, Russian Post received 17 billion rubles in budgetary investments to modernize 3,300 rural and remote postal offices. However, the funds were used inefficiently, as only 723 offices were modernized in 2022-2023, falling severely short of the planned amount. In fact, as of now, there isn't even a list of postal offices slated for modernization by 2030, creating a significant risk of failing to meet the president's goal of modernizing at least 25,160 postal offices by then.
A Neglected Strategy for Development
The Strategy for the Development of Russian Post until 2030, adopted in 2021, has not been reviewed since then. This lack of strategic planning has resulted in a lack of long-term development goals for postal communications, with no monitoring or reported interim results.
According to the auditors, Russian Post's main charter goal - generating profit - contradicts its social and state functions, such as ensuring citizens' right to free information transmission.
Inefficient Social Functions
After being transformed into a joint-stock company, some of the social functions once provided by Russian Post have become inefficient. For instance, the number of postal offices operating in reduced hours has nearly doubled, while the number of mailboxes installed outside postal offices has decreased by more than half since 2020. As of January 1, 2024, over 6,000 offices (every sixth) were temporarily closed due to staff shortages, unprofitability, and lack of premises.
Troublesome Management
The Accounts Chamber's report also criticizes Russian Post's management system. In the last five years, the organizational structure has been revised 25 times, leading to a 65% increase in the number of advisors in the management apparatus and a 48% increase in their salary fund. Rapid leadership changes have made management decisions inconsistent and void of continuity. Additionally, the board of directors does not fully perform its duties, particularly in regards to developing crucial documents.
A Mounting Financial Crisis
The audit revealed several issues with Russian Post's financial management. Lacking economic evaluation during borrowing processes, no limit for borrowings, and an unchecked "Net debt / EBITDA" indicator have led to a 70% increase in debts from 2020 to 2023, reaching 128.3 billion rubles, and a 79.7% increase in expenses for debt servicing from 2021 to 2023.
Real estate owned by Russian Post is also in a dismal state, with properties averaging 70% worn out and many, like the Paveletsky railway post office, operating below capacity.
Auditors' Recommendations
Following the audit, the Accounts Chamber has proposed a number of solutions, such as entrusting the Ministry of Digital Development, Communications, and Mass Media, in collaboration with Russian Post and other postal operators, to develop and submit a comprehensive strategic planning document for postal services by 2030.
Other recommendations include issuing directives to set a limit on debt obligations and the "Net debt/ EBITDA" indicator, amendments to legislation for the payment of compensations to employees who didn't receive their pensions or social payments on time, and improving staff training programs. Copies of the report were sent to the government, the presidential administration, and both chambers of parliament.
- The audit conducted by the Accounts Chamber on Russian Post's finances suggests that the company should submit a comprehensive strategic planning document on postal services, up to 2030, to be developed by the Ministry of Digital Development, Communications, and Mass Media, in collaboration with Russian Post and other postal operators.
- In an effort to address the mounting financial crisis at Russian Post, the Accounts Chamber suggests issuing directives to set a limit on debt obligations and the "Net debt/ EBITDA" indicator.
- Unprofitability has led to the temporary closure of over 6,000 post offices (every sixth) as of January 1, 2024, according to the audit findings.
- The Strategy for the Development of Russian Post until 2030, adopted in 2021, has not been reviewed since then, contributing to the company's unprofitability, as revealed in the Accounts Chamber's report.
