Press Releases

ANCOM decides that the Net Cost of the Universal Postal Service in 2014 Need Not Be Compensated

19.01.2016

 

ANCOM adopted and communicated to CNPR its decision establishing that the compensation of the net cost for the provision of the universal postal service in 2014 is not necessary, as this net cost does not represent an unfair burden for the National Company Romanian Post (CNPR). This decision resulted from an analysis of the unfair burden character of the net cost incurred by CNPR in providing the universal postal service in 2014, which showed that the return on capital employed for the universal service segment exceeded the level of reasonable rate of return.
CNPR is the designated universal service provider in Romania, therefore it has the right to request the compensation of the net cost for the provision of services within the scope of universal service, which is the difference resulted between the costs incurred by CNPR in fulfilling its universal service obligations and the provider’s net cost in the scenario that it conducted its activity exclusively on commercial bases, without universal service obligations. According to the new provisions which in force starting from 2015, the net cost is deemed an unfair burden if it cumulatively meets two conditions regarding the level of the return of capital employed and the materiality threshold of the incomes from the provision of services within the scope of universal service.
On August 14th, ANCOM received CNPR’s net cost compensation request, accompanied by a statement on the expenditures, the income and the capital employed corresponding to the provision of services within the scope of universal service for the year 2014, as well as the Factual Findings Report on verifying the request for compensation of the net cost of services within the scope of universal service, prepared by an independent auditor. In assessing the unfair burden character based on the above-mentioned conditions, ANCOM extracted relevant information from the separated financial statements kept by CNPR for the year 2014.
The Authority evaluated whether the net cost is an unfair burden for CNPR by calculating the level of return on capital employed for the universal service segment and ascertained that, in 2014, the universal service provider made a profit on the segment of services within the scope of universal service, and that the return on capital employed was above the reasonable level of return established by ANCOM for 2014 at 13.10%. Taking into account that the first criterion had not been met, and thus the second criterion no longer needed to be analysed, the Authority concluded that the amount of the net cost is not an unfair burden for the universal service provider, and therefore it will not be compensated.
Access to universal postal service is a person’s right to benefit from the uninterrupted provision of basic postal services, at a certain quality level, at any point on the territory of Romania, at affordable tariffs. A designated universal service provider has the obligation to provide services at affordable tariffs throughout the territory for which it has been designated, including areas situated in exceptional geographical conditions or with low population density, where the volume of correspondence is reduced and therefore its activity may be unprofitable.

 

Between 16 December 2015 and 11 January 2016, the Authority placed under public consultation the draft decision regarding the request for compensation of the net cost for the provision of postal services within the scope of universal service in 2014. Having received no comments during this period, on 14 January 2016, ANCOM adopted the respective decision and communicated it to CNPR, and thus the decision entered into force. The full text of the decision is available, in Romanian, here.
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