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Igor Smelyansky, 42, gets regular criticism as the CEO of national postal operator Ukrposhta.
The state-owned behemoth employs 74,000 people and has been one of the slowest of the Soviet-legacy infrastructure companies to modernize. It is notorious for its slow delivery and often rough service.
Smelyansky prefers to see the complaints as useful signposts.
“I accept the criticism,” Smelyansky told the Kyiv Post during an interview held at a redesigned Ukrposhta branch in Kyiv on March 15. “It’s good that people castigate Ukrposhta and call it ineffective. If you don’t know about a problem, you simply can’t fix it.”
He says he knew what he was getting into when he took the job 18 months ago. Ukrposhta, established in 1994, was simply too cumbersome to be turned into a competitive business quickly.
Smelyansky’s ambition is to turn Ukrposhta into a top-notch postal service and courier company, perhaps even offering banking services.
Former monopoly
Still sometimes seen as a monopoly, Ukrposhta has long lost its dominance to agile private delivery companies, such as Nova Poshta, Meest Express and Germany’s DHL. For example, Ukrposhta transports 22 million parcels a year, while Nova Poshta handles more than six times that number — 140 million.
“We have a monopoly only on common sense and social responsibility, as Ukrposhta has to provide services in remote villages where nobody else wants to work,” Smelyansky said.
Unlike private companies, Ukrposhta can’t close or move any of their 12,000 departments: The company is legally obliged to maintain all of their existing branches in order to continue servicing every area in Ukraine.
Ukrposhta can’t leave locations even if they are unprofitable. To prop up loss-making branches, the company receives a subsidy from the government to help cover the rent.
While this ensures every Ukrainian has access to communication services, “somebody has to pay for this,” Smelyansky said.
Giant private delivery service Nova Poshta doesn’t think that’s fair, however: It filed a claim against Ukrposhta in December, accusing it of illegal competition practices. In particular, Nova Poshta asks Ukraine’s Anti-Monopoly Committee to stop the government from subsidizing Ukrposhta by renting of the state and communal premises free of cost. According to the claim the private firm filed at the end of November, 57 percent of all Ukrposhta’s offices are rent for only Hr 1 a year.
Such benefits allow Ukrposhta to dump the prices, and thus “disfigure the competition” in Ukraine, the claim reads. “The governmental help provided to this enterprise is too generous.”
Smelyansky says the claim is groundless.
“Many postal services around the world are subsidized by governments to keep working in remote areas and maintain otherwise unprofitable premises,” he said. “Ukrposhta is forced to work in villages with populations of just 3,500 people.”
Apart from that, Ukrposhta can’t make cutbacks to its workforce of 74,000 employees.
“When?I came, it was on the condition that I would be the first CEO who would not cut back on offices, and not fire employees,” he said. The condition was set out by the Cabinet of Ministers, which owned the company when Smelyansky was hired.
He compares his presence on the market with that of the private bank networks: There were 10,500 bank branches and close to 12,000 Ukrposhta post offices in 2016. The number of Ukrposhta offices now remains the same, while the number of bank branches has shrunk to 9,200.
With limited room for maneuver, and having to deal with the missteps of previous management, Ukrposhta has been overtaken by its more nimble private competitors.
“I’d like to be flexible and work like a private company, but we work according to different rules, and with different responsibilities,” he said.
Transforming Ukrposhta
Smelyansky, however, now has some of the flexibility he wanted. It came when Ukrposhta transformed into a public joint stock company with a single owner — the Infrastructure Ministry, under its current head, Volodymyr Omelyan.
Smelyansky says this has freed the company from excessive government control. He underscores three major changes: first, there is no longer any need to check minor decisions with ministries and institutions; second, the State Financial Inspection has no say in decision-making at Ukrposhta anymore; and third: “When officials or politicians demand that I do something or threaten to fire me, I remind them that they can no longer interfere,” Smelyansky said. |
