ISLAMABAD: The Government has decided that sale/ disposal of assets of Utility Stores Corporation (USC), including the properties, shall be executed within the current financial year and the utilisation of Rs 15 billion available with Ministry of Industries and Production (MoI&P) as CFY budget for clearance of sugar subsidy arrears of TCP, sources close to SAPM on MoI&P told Business Recorder.
Sharing the details, sources said that on August 28, 2025, Ministry of Industries and Production briefed the forum that USC was established on 3rd September, 1971 as a government company to provide essential food items at subsidised rates and act as a price moderator. In 2007, its network was expanded to the level of Union Council, increasing the number of outlets from 1,023 to 5,557 and that of staff members from 3,892 to 12,749 by 2009. This necessitated the increase in substantial subsidies to sustain the operations of the USC. Despite support, the USC had been incurring continuous losses since 2013, with accumulated losses reaching Rs. 23.8 billion by June 2025.
On August 13, 2024, the Federal Cabinet placed USC in Phase-II of the active privatisation list. Later, on 16th August, 2024, the Federal Government was pleased to discontinue subsidies for the USC. To cut losses, USC Board approved a rightsizing plan in December 2024 which led to the reduction in the number of stores from 3,742 to 1,904 and employees from 11,614 to 7,710 by February, 2025. Despite these efforts for rightsizing, the projected annual losses remained around Rs. 8.315 billion annually. Accordingly, a case was presented to the Prime Minister on 28th June, 2025 with two options viz ;(i) closure of operations by 31st July 2025; or (ii) continuation of operations till its privatisation along with Rs. 14 billion grant to clear the vendor liabilities and stabilise cash flow.
‘Smooth’ USC closure: Rs30.216bn TSG approved by ECC
The Prime Minister approved the closure of the USC operations by 31st July 2025 and constituted a committee under the Finance Minister to oversee the closure, early privatisation, and modalities for payment of Voluntary Separation Scheme (VSS) to regular employees.
The USC’s Board of Directors approved the closure of its operations on July 31, 2025. The USC closed down 1,059 rented out stores and 1,230 franchise outlets between 3rd and 14th July, 2025. However, Collective Bargaining Agents (CBA) and staff unions staged a sit-in at the USC Headquarters, Islamabad, thereby halting the process. To address their concerns, the Prime Minister constituted a committee led by the Special Assistant to the Prime Minister on Political Affairs Rana Sanaullah to hold meetings with the collective bargaining agents and staff unions. The sit-in was called off as a result of the meetings held on the 25th and 31st July, 2025, respectively.
The Ministry of Industries and Production further apprised the ECC that the committee chaired by Finance Minister held four meetings on 16th July and 15th, 20th and 22nd August 2025 to review the process of closure. The committee also finalised the following package to lay-off USC employees with a cost ranging between Rs. 16 and Rs. 19.5 billion: (i) a severance package of Rs. 13.225 billion for regular employees; (ii) a compensation package of Rs. 2.192 to Rs. 6.337 billion for contractual and daily wagers employees, to be finalized after negotiation with CBA; however, this will not be used as a precedent; and (iii) terminal dues of Rs. 5.067 billion for employees and a compensation package of Rs. 684 million for widows of employees in line with the employment terms of the USC.
The ECC was apprised by the Ministry of Industries and Production that the USC stopped its operations nationwide on 31st July 2025 and started shifting stocks from stores to the warehouses for further disposal. It intended to lay-off majority of its staff by 31st August 2025. The Ministry of Industries and Production further informed the ECC that the USC employees have not been paid their salaries for the month of July and August 2025, as well as, salaries for half the month of April 2025. Hence, a total sum of Rs. 1.467 billion is required to pay the salaries of 7,710 employees.
The committee constituted under Finance Minister also instructed the USC to obtain fresh valuations for its 21 properties to partially meet the cost of laying-off staff and meeting other liabilities. In response, preliminary assessments conducted by State Bank of Pakistan approved surveyors stated that the total value of these assets is between Rs. 10.5 billion to Rs. 12.6 billion. Out of these properties, the title of properties belonging to the Roti Corporation of Pakistan acquired by the USC from the Privatization Commission has not been transferred to USC yet. To proceed with the sale, these properties first need to be transferred to USC which may involve additional costs. A formal request has already been made to the Privatization Commission for the release of the original documents. Furthermore, certain USC properties are subject to leasehold rights, require building completion certificates, and are liable for commercialization charges. Completion of record and obtaining aforesaid permissions will require extra expenditure.
The Ministry of Industries and Production further informed the ECC that from September to November, 2025 around 832 staff (for maintaining 88 warehouses and 44 regional offices) will be required to complete audit, stocktaking, reconciliation and auction. Personnel to deal with pending and emerging litigation will also be needed. This will entail an approximate expenditure of Rs. 210 million per month. Moreover, from December 2025 to June 2026, a further reduced workforce of 326 employees will be retained to assist in disposal of the USC properties and to perform any residual tasks at a monthly expense of around Rs. 115 million.
The ECC was further apprised that the committee instructed the Ministry of Finance and the USC to prepare a detailed cash flow plan mapping out monthly inflows and outflows. The cash flow plan was presented to the committee on 22nd August, 2025. The committee further urged for early disposal of USC properties to generate funds to payoff the liabilities and tasked the Secretary Law & Justice Division to explore legal avenues for expeditious disposal of properties within the framework of the Privatization Commission Ordinance, 2000.
The Ministry of Industries and Productions also shared with the ECC that the financial condition of the Utility Stores Corporation (Private) Limited remained critical, with no funds available to pay the salaries or incur the expenditures for severance and compensation packages, and other dues of its employees. Moreover, USC intends to lay-off its employees with effect from 31st August 2025 minus the essential staff as explained in the summary. Therefore, it is essential that the severance and compensatory packages may be approved at the earliest. Accordingly, ECC has been requested to approve Rs. 30.216 billion as a supplementary grant to Ministry of Industries & Production for USC, as per following details and cash flow plan: (i) Rs. 13.225 billion for severance package to regular employees; (ii) Rs. 5.751 billion for terminal dues of regular and contract employees and compensation for widows of employees who have died in service, as per terms of employment; (iii) Rs. 2.192 to Rs. 6.337 billion, exact amount to be finalized after negotiation with CBA as one-time compensatory payment to contractual and daily wage staff; (iv) Rs. 1.467 billion for payment of salary for April (15 days) and operational expenses for July and August 2025; Rs.630 million for retention of 832 staff from September to November 2025 and Rs.805 million for retention of 326 staff from December 2025 to June 2026; and (v) Rs. 2 billion for payment of liabilities of vendors while remaining Rs. 9,935 million to be budgeted in FY 2026-27.
Copyright Business Recorder, 2025