Decision on the amount of net cost of unfair financial burden of the universal postal services provider
NEWS
At its session of 14 November 2014, the Council of HAKOM adopted a decision on the amount of net cost representing unfair financial burden on the universal service provider, HP-Hrvatska pošte d.d.
For additional information please contact:
Croatian Regulatory Authority for Network Industries (HAKOM)
Roberta Frangeša Mihanovića 9
10110 Zagreb, Croatia
Tel. + 385 (0) 1 700 70 07
Fax + 385 (0)1 700 70 70
Media inquiries can be submitted online using HAKOM’s official website: https://www.hakom.hr/
Registration required.
ABOUT HAKOM: HAKOM (www.hakom.hr) - Croatian Regulatory Authority for Network Industries – ensures preconditions for a fair market competition, stable growth and environment for innovations in the electronic communications and postal services market. HAKOM protects users’ interests and the possibility of choice among various communications and postal services at affordable prices, defines sustainable competitive conditions for operators and service providers under fair conditions for return on investment, and provides support to economic growth, public services and the quality of life in the Republic of Croatia by using modern technologies. HAKOM’ strategic goals are: to promote regulation of the electronic communications and postal services market, to support growth of investments and innovations in the electronic communications and postal services market, to provide efficient use of limited resources, to accelerate the growth of broadband products and services, to provide affordable offers of communications and postal services, to provide protection and informing of users, to build an efficient and comprehensive information system, to define and implement efficient processes, and to acquire multi-disciplinary competencies in market regulation.
At its session of 14 November 2014, the Council of HAKOM adopted a decision on the amount of net cost representing unfair financial burden on the universal service provider, HP-Hrvatska pošte d.d.
ZAGREB, 14 November 2014 – HP-Hrvatska pošta d.d. submitted for the first time a Request for compensation of unfair financial burden to HAKOM and a decision on amount of net cost representing unfair financial burden was adopted on 14 November 2014. For the purpose of verification of the calculation enclosed with the request submitted by the HP-Hrvatske pošte d.d., HAKOM asked for the opinion of an independent auditor BDO Hrvatska d.o.o. and organized a series of workshops with representatives of the independent auditor and HP-Hrvatske pošte d.d., where particular elements of the calculation were discussed. On the basis of the submitted information and organized workshops, the independent auditor submitted its report on 29 October 2014 stating that that some elements of HP’s calculation were incorrect. The independent auditor concluded that the net cost amounts to HRK 94, 383,177.00 instead of HRK 149,273,656.00, as presented by HP-Hrvatska pošta d.d., that is, that the cost is lower by HRK 54,890,479.00.
HP-Hrvatska pošta d.d. is the only postal services provider on the Croatian market obliged to provide universal services. The universal service obligation means for HP-Hrvatska pošta d.d. that this service must be available to all citizens of the Republic of Croatia on the entire territory of the Republic of Croatia at the same and at an affordable price. On the other hand, other providers of postal services may choose which services to provide and in which areas. For example, HP-Hrvatska pošta d.d. must deliver postal items to the most remote and most inaccessible areas of the Republic of Croatia. Therefore, it will deliver a letter from Zagreb to Zagreb for HRK 3.10 but it will also deliver a letter from Zagreb to Lastovo for the same price. Regardless of the number of postal items for some rarely populated areas, these postal items must be delivered by HP-Hrvatska pošta within the prescribed deadlines.
Were it not for this obligation, HP-Hrvatska pošta d.d. would be able to act as any other providers of postal services, that is, it would close hundreds of postal offices and several hundred of courier offices in less densely populated areas and on less accessible islands. Therefore, in this hypothetical case, it would choose users and offer only profitable services, which is the case with other providers of postal services operating exclusively in accordance with market principles. It must be underlined that this unfair burden and related costs are not caused by the inefficiency of the universal services provider HP-Hrvatske pošte d.d., but result from its obligation to provide the service in question in the entire territory of the country in compliance with high quality standards.
The unfair burden or nest cost is a compensation for the obligation imposed on the universal service provider which HP-Hrvatska pošta d.d. is entitled to according to EU regulations, that is, to the Postal Directive. The right of a universal service provider to compensation is envisaged in national legislation of all EU Member States, and a lot of them also envisage a financing mechanism for this compensation. For example, Belgium, France, Greece, Slovakia and many other countries have established such mechanism which has been applied in practice for many years, and their national universal service providers receive compensation for this obligation. PSO (Public Service Obligation) or obligation to provide a service of general, public interest is not limited to the postal services market but exists in many other industries, for example, rail, air traffic, ferry traffic and the similar.
In accordance with the EU rules, or, more precisely SGEI (Services of General Economic Interest), some national universal service providers have already enforced their compensations: the Belgian post, for the period between 2013 and 2015 receives a compensation of EUR 300 million a year, the French post receives a compensation of EUR 240 million a year, Greek post received EUR 52 million for 2012, and the Slovakian post EUR 12 million. The Check post submitted its request for compensation amounting to EUR 65 million this year. Under the same rule (SGEI), HP-Hrvatska pošta d.d. submitted a request for compensation of the unfair financial burden, and the amount to be compensated to HP-Hrvatska pošta d.d. amounts to around HRK 94 million, which is much lower than the amount received by the above mentioned providers of universal service from other EU Member States.
The Postal Services Act prescribes that part of the unfair financial burden will be compensated from the compensation fund to which not only HP-Hvatska pošta d.d. contributes but also other providers of interchangeable postal services who are not obliged to provide the universal services but may provide only commercial services. Through the payment of net cost from the compensation fund, HP-Hrvatskoj pošti d.d. would be compensated for only a small part of the cost of this service. The remainder of the unfair burden up to the full amount would be paid in accordance with the Postal Services Act, the State Aid Act, the EU Directives and all regulations on state aid supervised by the EC.
The money paid to HP-Hrvatska pošta d.d. for net cost will be used for further maintenance of accessibility and sustainability of the postal network in order to ensure the availability and accessibility of universal service, as a service of general economic interest and interest of all citizens of the Republic of Croatia, to everybody under identical conditions on the entire market.
# # # HP-Hrvatska pošta d.d. is the only postal services provider on the Croatian market obliged to provide universal services. The universal service obligation means for HP-Hrvatska pošta d.d. that this service must be available to all citizens of the Republic of Croatia on the entire territory of the Republic of Croatia at the same and at an affordable price. On the other hand, other providers of postal services may choose which services to provide and in which areas. For example, HP-Hrvatska pošta d.d. must deliver postal items to the most remote and most inaccessible areas of the Republic of Croatia. Therefore, it will deliver a letter from Zagreb to Zagreb for HRK 3.10 but it will also deliver a letter from Zagreb to Lastovo for the same price. Regardless of the number of postal items for some rarely populated areas, these postal items must be delivered by HP-Hrvatska pošta within the prescribed deadlines.
Were it not for this obligation, HP-Hrvatska pošta d.d. would be able to act as any other providers of postal services, that is, it would close hundreds of postal offices and several hundred of courier offices in less densely populated areas and on less accessible islands. Therefore, in this hypothetical case, it would choose users and offer only profitable services, which is the case with other providers of postal services operating exclusively in accordance with market principles. It must be underlined that this unfair burden and related costs are not caused by the inefficiency of the universal services provider HP-Hrvatske pošte d.d., but result from its obligation to provide the service in question in the entire territory of the country in compliance with high quality standards.
The unfair burden or nest cost is a compensation for the obligation imposed on the universal service provider which HP-Hrvatska pošta d.d. is entitled to according to EU regulations, that is, to the Postal Directive. The right of a universal service provider to compensation is envisaged in national legislation of all EU Member States, and a lot of them also envisage a financing mechanism for this compensation. For example, Belgium, France, Greece, Slovakia and many other countries have established such mechanism which has been applied in practice for many years, and their national universal service providers receive compensation for this obligation. PSO (Public Service Obligation) or obligation to provide a service of general, public interest is not limited to the postal services market but exists in many other industries, for example, rail, air traffic, ferry traffic and the similar.
In accordance with the EU rules, or, more precisely SGEI (Services of General Economic Interest), some national universal service providers have already enforced their compensations: the Belgian post, for the period between 2013 and 2015 receives a compensation of EUR 300 million a year, the French post receives a compensation of EUR 240 million a year, Greek post received EUR 52 million for 2012, and the Slovakian post EUR 12 million. The Check post submitted its request for compensation amounting to EUR 65 million this year. Under the same rule (SGEI), HP-Hrvatska pošta d.d. submitted a request for compensation of the unfair financial burden, and the amount to be compensated to HP-Hrvatska pošta d.d. amounts to around HRK 94 million, which is much lower than the amount received by the above mentioned providers of universal service from other EU Member States.
The Postal Services Act prescribes that part of the unfair financial burden will be compensated from the compensation fund to which not only HP-Hvatska pošta d.d. contributes but also other providers of interchangeable postal services who are not obliged to provide the universal services but may provide only commercial services. Through the payment of net cost from the compensation fund, HP-Hrvatskoj pošti d.d. would be compensated for only a small part of the cost of this service. The remainder of the unfair burden up to the full amount would be paid in accordance with the Postal Services Act, the State Aid Act, the EU Directives and all regulations on state aid supervised by the EC.
The money paid to HP-Hrvatska pošta d.d. for net cost will be used for further maintenance of accessibility and sustainability of the postal network in order to ensure the availability and accessibility of universal service, as a service of general economic interest and interest of all citizens of the Republic of Croatia, to everybody under identical conditions on the entire market.
For additional information please contact:
Croatian Regulatory Authority for Network Industries (HAKOM)
Roberta Frangeša Mihanovića 9
10110 Zagreb, Croatia
Tel. + 385 (0) 1 700 70 07
Fax + 385 (0)1 700 70 70
Media inquiries can be submitted online using HAKOM’s official website: https://www.hakom.hr/
Registration required.
ABOUT HAKOM: HAKOM (www.hakom.hr) - Croatian Regulatory Authority for Network Industries – ensures preconditions for a fair market competition, stable growth and environment for innovations in the electronic communications and postal services market. HAKOM protects users’ interests and the possibility of choice among various communications and postal services at affordable prices, defines sustainable competitive conditions for operators and service providers under fair conditions for return on investment, and provides support to economic growth, public services and the quality of life in the Republic of Croatia by using modern technologies. HAKOM’ strategic goals are: to promote regulation of the electronic communications and postal services market, to support growth of investments and innovations in the electronic communications and postal services market, to provide efficient use of limited resources, to accelerate the growth of broadband products and services, to provide affordable offers of communications and postal services, to provide protection and informing of users, to build an efficient and comprehensive information system, to define and implement efficient processes, and to acquire multi-disciplinary competencies in market regulation.