This is how much more money CPS wants for its new 2 year social grants contract
Net1’s grant payment subsidiary CPS has provided the breakdown of how much it will earn, should a proposed 2-year contract be signed with Sassa to resolve the current grants crisis.
In documents submitted to the Constitutional Court, CPS proposed that a new ’emergency’ contract be approved to allow it to continue to provide social grants to millions of beneficiaries in South Africa, after its illegal and invalid contract comes to an end on 31 March.
The department of social development and Sassa were ordered in 2014 to come up with a new plan to handle grants payments, however they failed, leaving the country on the edge of catastrophe as parties try to find a solution in court.
One solution – and the only solution according to CPS – would be to allow Sassa to skip procurement processes and sign an emergency contract allowing CPS to continue providing the service it has been for the past 5 years.
However, as the old contract was ruled to be invalid and illegal, a new contract would need to be signed, with new terms – which includes a new price.
Previously, CPS was earning around R16.50 for every grant that was paid out. In the new contract, the group negotiated for a “reasonable” increase to that fee, which would work out to the old price plus CPI (6.6%).
This would be paid as a bulk payment, the group said, as the new contract would be over a short time – which led to the Constitutional Court asking for better pricing clarity.
CPS has now revealed that the change would work out to be R17.53 per grant in the first year of the contract, and R18.68 in the second year.
This is far lower than initial speculative reports that said the company would ask for R25 per grant – and it is also lower than the South African Post Office’s quote of around R20 per grant.
Comparing bulk payments, the average amount paid to CPS over the past 12 months was R171.6 million per month. In the new contract terms, taking into account projected growth in beneficiaries, the proposed bulk payments are R183 million per month in the first year to R195 million in the second year.
The total bulk payment for the two year contract has been proposed at R4.6 billion, or roughly R192 million per month.
The Constitutional Court has reserved judgement in the case, and is expected to make a ruling this week. CPS has warned that without a new contract being signed this week, it will be impossible to make grants payments by 1 April.
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