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ISLAMABAD:

The government on Wednesday reaffirmed its decision to close the lossmaking Utility Stores Corporation from the end of this month and constituted a panel to consider giving a golden handshake to 11,421 employees that may cost it over Rs29 billion.

It was not clear whether the government would give the severance package to all 11,421 employees or limit it to regular 5,217 employees. The discussions took place during a meeting of a committee constituted by the Prime Minister to oversee the closure and privatization of the Utility Stores Corporation (USC).

Finance Minister Muhammad Aurangzeb chaired the meeting, which was attended by other cabinet members.

The committee has been tasked with ensuring a smooth and transparent closure process, formulating a suitable VSS for USC employees, and recommending a structured timeline for privatisation, said the Ministry of Finance.

The finance ministry said that the committee reviewed the progress made in the light of the tasks assigned to it and held detailed deliberations on the way forward.

“It was reaffirmed that, in accordance with the government’s directives, all operations of USC will be closed by July 31, 2025,” according to the Ministry of Finance. The committee discussed at length the formulation of a fair and financially viable Voluntary Separation Scheme (VSS) for the USC employees, it added.

Trading entities like USC struggled with high liabilities, ineffective subsidy utilisation, and operational inefficiencies, according to the SOEs performance report that the Ministry of Finance released last week. It added that dependence on delayed government subsidies creates cash flow crisis, while poor inventory management worsens fiscal risks

The Finance Ministry report stated that the USC lost Rs6.1 billion at the operating level during July-December period of last fiscal year and it was riddled with finance costs, adding to the burden due to compounding operational losses.

The USC model is subsidy-driven rather than market and cumulative losses stood at Rs15.9 billion as of December last year, according to the Finance Ministry. It added that the balance sheet revealed a weak equity of just Rs1.8 billion, heavily overshadowed by current liabilities of Rs50.7 billion, reflecting solvency risks and negative working capital.

According to the official documents, there were a total 11,421 employees of the USC, including 5,217 regular employees. The total cost of the golden handshake is estimated at Rs29.2 billion, including Rs22.8 billion for the regular employees. However, these figures are not final and the cost of the severance package will be determined by another committee.

The details showed that the regular employees having over 20 years association with the USC would get two running basic pays of the completed years while those having less than 20 years of experience will get either three running basic pay of completed years or 125% of the basic pay of the remaining months, whichever is higher.

The regular employees will also get terminal dues and house rents.

There are 3,319 contractual employees who are proposed to receive two running basic pay of completed years as compensation, which will cost Rs3.5 billion. Another 2,885 are the daily wagers who are proposed to be given two salaries of the completed years that will cost Rs2.9 billion.

The entity has 21 properties and it also faces a major issue of non-payments of promised subsidies of over Rs50 billion by the Ministry of Finance.

The Finance Ministry handout stated that during the course of the meeting, the members examined various dimensions of the proposed VSS, including its projected size, potential fiscal impact, and legal and operational implications associated with its structure and rollout. The Committee recommended that the Privatization Commission be consulted regarding the optimal structuring and feasibility of privatization or alternatively asset sales linked with the USC operations.

To facilitate a comprehensive analysis, the Chair constituted a sub-committee headed by the Secretary Establishment Division, stated the ministry.

The committee will include representatives from the Finance Division and the Industries & Production Division to examine the legal and operational aspects, contours, size, and structure of the proposed VSS and submit its report to the main Committee by the end of the week.

This will enable the Committee to consolidate its findings and finalize its report and recommendations to be submitted to the Prime Minister in line with the Terms of Reference, said the Ministry of Finance.

The SOEs report stated that USC’s heavy reliance on government subsidies and declining sales highlighted systemic inefficiencies. The USC reflects a structurally weak and inefficient business model that is unsustainable without continuous government subsidies.

The report showed that the company’s sales sharply dropped by more than 50% compared to the same period last year — showing the company’s inability to retain market share or operate competitively. However, one of the reasons for drop in sales was the government’s decision to wind up the entity.

The report underlined that without structural reform, including privatization, supply chain digitization, direct beneficiary targeting (DBT) of subsidies, and converting to a lean wholesale model, USC will continue draining fiscal resources with no viable path to self-sustainability.

ISLAMABAD: A meeting of the committee formed by the prime minister to oversee the closure and privatisation of the Utility Stores Corporation (USC) was held at the Finance Division on Wednesday.

Chaired by Finance Minister Muhammad Aurangzeb, the meeting was attended by Special Assistant to the Prime Minister on Industries and Production Haroon Akhtar Khan, secretaries of the Establishment, Finance, and Industries & Production divisions, the USC managing director, and senior officials of the Finance Division.

The committee, mandated to ensure a smooth and transparent closure process, is tasked with devising a fair Voluntary Separation Scheme (VSS) for USC employees and recommending a structured timeline for privatisation.

To facilitate a comprehensive review, Mr Aurangzeb constituted a sub-committee led by the Establishment Secretary, with representation from the Finance and Industries & Production divisions. The sub-committee will examine the legal and operational framework, scale, and structure of the proposed VSS, and submit its report by the end of the week.

Sub-body formed to finalise VSS and assess privatisation options

The findings will allow the main committee to consolidate its recommendations for submission to the prime minister in accordance with its terms of reference.

The committee reviewed progress on its assigned tasks and held detailed discussions on the path forward. It reaffirmed the government’s decision to wind up all USC operations by July 31.

Deliberations focused on formulating a financially viable and equitable VSS, with particular attention to the projected size, fiscal impact, and the legal and operational complexities involved.

It was also recommended that the Privatisation Commission be consulted to assess the most effective model for divestment, including the feasibility of full privatisation or selective asset sales associated with USC operations.

Established in 1971, USC is a state-owned enterprise tasked with supplying essential commodities at subsidised rates, primarily targeting low-income households. It currently operates over 4,000 retail outlets nationwide.

According to the Finance Ministry’s Federal State-Owned Enterprises (SOE) Performance Overview for the first half of FY25, USC posted a loss of Rs4.1bn over six months, with cumulative losses rising to Rs15.5bn — highlighting persistent structural and operational challenges.

Published in Dawn, July 17th, 2025

ISLAMABAD: Over 65 US companies joined a landmark webinar on Wednesday to explore commercial opportunities at Karachi Port and Port Qasim.

The webinar hosted by the US Department of Commerce’s International Trade Administration and the US Department of State, in collaboration with the Ministry of Maritime Affairs, part of the ‘Gateways to Growth: South Asia Port Opportunities’ series, has opened new doors for American commercial services in the port sector of Pakistan.

The webinar served as a strategic platform for American companies to engage directly with Pakistani port officials and private operators.

“US investors have made substantial contributions to Pakistan’s development, and we are confident that the port sector will be another area where we can achieve great success together,” said US Consul General Scott Urbom in Karachi, emphasising the role of partnership in fostering long-term commercial ties.

“We believe that by working together, we can unlock the full potential of Pakistan’s port sector, create new opportunities for American businesses, and contribute to Pakistan’s economic development,” he said.

Senior representatives from the Ministry of Maritime Affairs, Port Qasim Authority, Abu Dhabi Ports, which operates Karachi Gateway Terminal Ltd, and Dubai Ports World, which operates Qasim International Container Terminal, outlined Pakistan’s infrastructure goals, regulatory landscape, and trade priorities, and participated in the webinar.

The hybrid session highlighted how American firms can support Pakistan’s port development plans, helping expedite trade flows and build new supply chain linkages between our countries.

Ean Hundley, Director of ICT and Infrastructure Policy at the US International Development Finance Corporation, noted, “This initiative equips US companies with market intelligence and direct access to local decision-makers, enabling them to capitalise on infrastructure opportunities across South Asia.”

Published in Dawn, July 17th, 2025