4,000 USC staff to be laid off through VSS
The regular employees will be transferred to the federal government's surplus pool prior to the privatisation process.
According to sources, the USC Board of Directors, chaired by Federal Secretary for Industries Saif Anjum, approved the formation of a four-member committee to finalise the VSS package during a meeting. Officials from the Privatisation Commission and the Ministry of Finance were also in attendance.
During the meeting, it was stated that the USC will be shut down by July 30, 2025.
Earlier, in a meeting chaired by USC Managing Director Faisal Nisar on June 30, 2025, key decisions were made regarding the closure of USC operations, and instructions were issued to suspend all utility store operations nationwide from July 1, 2025.
All zonal managers were directed to close accounts of utility stores and warehouses and submit reconciliation reports within a day.
This decision triggered a strong backlash from employees and their representative bodies. Following protests, USC management met with corporation's officials and announced that the closure letter had been withdrawn, describing it as a misunderstanding.
However, just days later, the board reconvened and reaffirmed the closure plan. It was decided that all vendors and suppliers would be notified to retrieve their goods from stores and warehouses by July 10.
Additionally, rented utility store buildings will be vacated starting August 1, 2025, and notices will be issued accordingly. A two-year audit report is also expected by August, while a detailed report on USC assets and their valuations is being prepared to facilitate the privatisation process.
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Business Recorder
4 days ago
- Business Recorder
Employees continue protest against USC shutdown
ISLAMABAD: Employees of the Utility Stores Corporation of Pakistan (USC) continued their protest on Wednesday against the shutting down of Utility Stores by the federal government across the country. Organised under the Joint Action Committee of USC, hundreds of workers staged a sit-in outside the USC headquarters in Islamabad, demanding an immediate reversal of the closure decision. Protesters chanted slogans against the government and vowed to continue their demonstration until their demands are met. The demonstrators warned that closing down Utility Stores would worsen inflation and push thousands of workers into unemployment. 'Shutting down Utility Stores would be like handing over 260 million citizens to the mafias of inflation,' one protester said. They also alleged that the government's move violates national labour and privatisation laws. Due to the protest and heightened security measures, heavy traffic congestion was witnessed on roads leading to the Red Zone, particularly around the Parliament House, as authorities braced to avert possible movement of protesters towards the Red Zone. Addressing the rally, senior Pakistan People's Party (PPP) leader Chaudhry Manzoor Hussain strongly criticised the government's privatisation policy. He said they are not just selling off Utility Stores; they are selling institutions such as Pakistan International Airlines (PIA) and Pakistan Agricultural Storage and Services Corporation Ltd (Passco) as well. 'Tell me, is there any institution they do not want to sell?' He reminded the crowd that Zulfikar Ali Bhutto had established the USC to eliminate profiteering and provide affordable daily essentials to the public under one roof. Manzoor rejected the government's justification that Utility Stores are being shut down due to financial losses. He responded to official claims that Benazir Income Support Programme (BISP) now fulfills the need: 'BISP does not support those earning Rs25,000 to Rs30,000 monthly. Where will they go?' He also criticised the government's failure to implement its own minimum wage policy, claiming that the motive behind the closures is not reform but corruption and profiteering. 'They want to loot the system, and we will not let them do it,' he added. Addressing public concerns over PPP's role in the federal government, Manzoor clarified: 'We are not part of the government. Being part of the government means having the prime minister or your ministers in the cabinet. We only support the government's good actions — we are not part of their corruption.' Copyright Business Recorder, 2025
Express Tribune
18-07-2025
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USC closure
Listen to article The government's decision to shutter the loss-making Utility Stores Corporation (USC) by the end of July is a painful but necessary corrective to decades of fiscal bleeding. Between July and December 2024 alone, USC lost over Rs6 billion and has net liabilities of over Rs50 billion. Meanwhile, despite offering low prices, USC actually saw sales crash by 50% in recent times. This also puts the estimated Rs29 billion needed for golden handshakes into perspective. If no action was taken, USC would have spent the same amount just to keep running over the next few years. Although the government is considering limiting payouts to only 5,217 'regular' employees, after wasting billions for decades, skimping on severance pay is not the way to go. Future savings can still be reallocated to more productive initiatives that support low-income citizens. In the meantime, the government must ensure price control enforcement in areas that were highly reliant on utility stores to minimise the impact of closures on shoppers who actually relied on them. While a resolution for USC appears nearly finalised, progress on the much-publicised privatisation deals of other SOEs has been minimal. PIA has failed to attract suitable bidders despite multiple attempts, and the recent deal with Russia to revive Pakistan Steel Mills may backfire. None of the two dozen SOEs up for privatisation have sparked the kind of interest that would inspire government confidence. The closure of USC proves the government can make tough choices. Now, it must accelerate the pace of decision-making - from years to weeks — because, like USC, many state-owned enterprises are losing so much money that waiting to sell them for cents on the dollar could end up being more costly than shutting them down and salvaging what remains.
Express Tribune
17-07-2025
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Govt offloads another white elephant
Listen to article 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.
