Israel Post Asks $20-million Subsidy to Keep Servicing Periphery

The treasury will presumably argue that universal service should be financed through other revenue sources at Israel Post, which turns a profit

A worker at an Israel Post center in Modi'in, February 1, 2018.
Ofer Vaknin

Israel’s postal service has asked the Finance Ministry for a yearly subsidy of 70 million shekels ($20 million) to help pay to deliver and collect mail in outlying areas of the country.

Officials at Israel Post, which is a government corporation, say the amount is what it costs the company every year to meet its obligation to provide service to every community in the country.

The obligation to serve every locale has long been an economic drag on the postal service, but the issue has not been addressed, Israel Post said. The postal service wants the government to either provide the subsidy or eliminate the universal service requirement.

The postal service’s request for a subsidy is not expected to get a receptive hearing at the Finance Ministry. The treasury will presumably argue that universal service should be financed through other revenue sources at Israel Post, which turns a profit.

A reorganization plan for the post office adopted in late 2014 reduced Israel Post’s obligation to deliver mail from Sunday through Thursday to between two and three days a week, on a rotating basis, but for whatever reason the reform plan did not apply to the most remote areas of the country where mobile postal vans operate. These locales are still receiving mail deliveries five days a week.

“The van leaves empty and comes back empty,” a senior postal official said. “We are already several years after the reform and it requires a measure of improvement in this area as in other matters. Postal branches, for example, are open until 8 P.M. [some days of the week] and no one comes,” the official said.

The background to this requirement by the post office is the planned privatization of the company in 2018. The Ministerial Committee on Privatization is due to meet this month and decide on a partial privatization of the Israel Postal Company’s operations. In the first stage, 20% of the corporation is to be sold to a private investor, to be followed later by the sale of another 20% stake. Israel Post has said that it is seeking to improve the regulatory environment in which it operates, which it said will boost the amount that the state receives when it sells off interests in the government corporation.