The Postal Corporation of Kenya, Posta, wants to increase letter sending tariffs by 43 per cent despite dwindling postage business.
The state agency has written to the industry regulator Communications Authority of Kenya seeking approval to raise rates for sending domestic letters from Sh35 to Sh50 per letter. This rate was last revised five years ago, in 2012.
In a request to CA, Posta cited increasing costs of doing business as the reason for the increment.
“They cite increase in fuel prices, increase in rent on leased business premises, introduction of VAT charges on postal products, increased wages and welfare costs, general operating expenses, and license fees as the basis for the increase in costs,” said CA in a notice published in the Kenya Gazette on Friday.
The number of domestic letters sent has been dropping consistently over the years thanks to technology, as people opt to stay in touch using email and social media.
According to the latest CA industry statistics covering quarter two of the current financial year 2016/2017 (October to December 2016) the number of letters sent domestically dropped by 7.7 per cent from 17,211, 415 in the first quarter to 15,894,540.
Posta has 623 outlets distributed across the country, some of which cost more to operate than the revenue they generate.
Last September, acting Post Master General Dan Kagwe said the corporation needed at least Sh600 million from the Universal Service Fund kitty to keep open some of its loss-making outlets located in remote areas to mitigate losses.
Posta has been struggling to remain afloat in the advent of rise in technology use for communication.
Revenue from postal and courier services has dropped by 36.7 per cent since 2011 to stand at Sh4.8 billion as at end of 2015/2016 financial year on June 30, 2016.
Total investment in the postal and courier business has also dropped by 22.6 per cent over the period to Sh327 million from Sh504 million in 2011.
CA has invited the public to give their views on the proposed tariff within a month before it issues a verdict on the matter.