Social grant distributor Cash Paymaster Services (CPS) wants to be paid more money by the South African Social Security Agency (Sassa) if its contract with the agency is extended for another six months.
The agency approached the Constitutional Court on Tuesday, requesting that the court extend its invalid contract with CPS.
It says that the Post Office, which will take over the distribution of grants from the 1st of April, doesn’t have capacity to provide the cash payment service to 2.8 million beneficiaries.
Judgement in the matter has been reserved.
The South African Post Office admitted in the Constitutional Court that while it is ready to take over the distribution of social grants come April, it wont be able to without the assistance of Cash Paymaster Services, the same company it’s taking over from.
But CPS will only assist the Post Office if government pays it more money to distribute cash payments for the next six months.
"We will be unable to trade beyond the end of May on the new system. The end of May is when CPS runs out of money if it's not able to negotiate a price. If it is to continue to require operating, its loss will be R70 million per month."
The company says if it’s only brought in to distribute cash payments to 2.8 million beneficiaries at the same price of R16,44 per beneficiary, it would result in reduced revenue and higher operating costs.