The Old New Beginning in the Postal Services, to be Continued Metodi V. Metodiev November 2006

Through the last couple of year we have been witnessing the pointless delay of the complete liberalization of the postal services in the country by the government.

In 2002 the government decided to continue the monopoly of the Bulgarian post EAD on the so called reserved services (parcels up to 150 gr.) of the universal postal service aiming, from one side to assure smoother transition to full liberalization of the market, and on the other side to meet and implement the new EU criteria and directives in the postal services. It was expected the state monopoly in the sector to be decreased by piecemeal (from 1st of Jan, 2006 and 1st of Jan, 2007 respectively) decrease of the limits of weight and price of the services, included in the reserved sector. The deadline for full liberalization of the sector according to the EU should be 2009.

The fundamental characteristics of the postal monopoly do not differ from these of any other controlled by the government segments in the economy: lack of competition, especially in particular regions within the country; lack of innovation; low service quality and overall incredibly low effectiveness of the sector.
Two basic goals need to be achieved by the government: faster completion of the processes of liberalization and privatization.

1) The first step is liberalization – this will be abolition of the state monopoly by liberalization of the reserved services. In this way, different companies will compete to offer these services. The abolition of license fees, minimum weight limits, price requirements, etc. is to be done as well.

The liberalization of the sector, though just partial, for general contentment is already a fact. One result from it is the granted license to Tip Top Courier Jsc. on 20.11.2006 for 20 years period to provide universal postal services. The acquired licence ? 3 for postal operation provides the company with the opportunity to start offering postal services from 2007. Everyone is looking forward to seeing the positive results from diversification of the monopolist sector. Basically, these results will be summed up to establishment of competition in the sector, which will lead to better quality, more innovations, prices determined by the market, aggregate optimization of the resources to meet the economic needs and better effectiveness and quality of the service itself.

2) Te expected continuation of the process of liberalization is privatization of Bulgarian Post EAD. Privatization is characterized by restriction of the government control in the economy and transfer of ownership of particular assets. The general truth stipulates that “the freedom of trade is fundamental principle, and each government restriction has to be exceptional, legitimized and well argumented. The state ownership over assets is part of the state’s involvement into the economy and as such should be argumented. If there is a lack of sound arguments, the state ownership is illegitimate. ”

There are a few methods of privatization, but the most effective is privatization through the stock exchange. This way, both the principles of market economy with free competition and achievement of the optimal price, and the transparency in privatization will be fulfilled.

In addition, it should be mentioned that now is the best time for privatizing Bulgarian Post EAD since the company has had positive financial account for four consecutive years, which will attract more investment interests.

There are numerous examples of successful privatizations in the postal services. The Netherlands, Belgium, and Germany have already privatized partially or completely the postal services.