Treasury not involved in Net1 negotiations

2017-03-05 14:06
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Johannesburg - National Treasury has denied reports that it is participating in negotiations with Net1’s subsidiary Cash Paymaster Services (CPS) for the contract for the payment of social grants. 

On Friday, amid media reports that Treasury has been in negotiations with CPS, a statement was released which read: “National Treasury wishes to clarify that it is not part of this process.”

READ: US analyst urges clients to sell Net1 shares as concerns mount over Sassa

The Department of Social Development had requested National Treasury’s participation. However, National Treasury advised that such a request could not be favorably considered for the following reasons:- 

- The procurement regulatory framework delegates this responsibility to the Accounting Officer of the respective department;

 - SASSA and the Department of Social Services have announced publicly that at some point they will approach National Treasury to regularise process underway; 

- In the light of the above the participation of National Treasury at this stage will amount to a conflict of interest.  

“National Treasury remains committed to assist when required to find solutions within the confines of the constitution and the procurement regulatory framework to ensure that the deserving beneficiaries of the grants do not suffer,” the statement went further to read. 

Electronic payments provider, Net1 has been in the center of a social grants storm since 2012 when CPS won a R10bn tender to electronically distribute social grants to 17 million recipients in South Africa on behalf of the South African Social Security Agency (Sassa).

But the contract ran into problems in April 2014 when the Constitutional Court declared it invalid owing to irregularities in the awarding of the deal. The court further ruled that Sassa needed to redo the tender process.

READ: Social grants provider Net1 is buying 15% of Cell C

However, after launching a new tender process in 2015, SASSA subsequently did not award a new contract as it said the bids were non-compliant.

Net1 did not participate in the fresh tender process and at a Parliament briefings this year, Sassa said that it was not ready to assume the payment function itself by April 1, as previously planned.

Subsequently, the crisis has started to escalate after Sassa also withdrew an application to the Constitutional Court this week to extend a payment distribution contract with CPS.

The debacle has sparked confusion and concerns over whether millions of people will continue to receive grants, putting the country’s welfare system in limbo.

On Thursday it had been announced that Net1 had confirmed that it has agreed to buy a R2bn, 15% stake mobile network Cell C.

Earlier this week, Blue Label Telecoms [JSE:BLU] said it reached a last-minute agreement to acquire 45% of Cell C, which is South Africa’s third largest network with about 24 million users.

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