Latest news with #UtilityStoresCorporation
Express Tribune
17 hours ago
- Business
- Express Tribune
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
2 days ago
- Business
- Express Tribune
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.
Express Tribune
3 days ago
- Business
- Express Tribune
Utility Stores to shut down by July 31
Listen to article A high-level committee formed by the prime minister to oversee the closure and privatisation of the Utility Stores Corporation (USC) has reaffirmed that all operations of the corporation will be shut down by July 31 in accordance with government directives. The meeting, held in Islamabad on Wednesday, was chaired by Finance Minister Muhammad Aurangzeb. The committee is tasked with ensuring a smooth and transparent closure process, along with formulating a Voluntary Separation Scheme (VSS) for USC employees and recommending a structured timeline for privatisation. Read More: 6,000 Utility Stores workers to be laid off The committee reviewed the progress of its assigned tasks and held detailed discussions on the next steps. During the meeting, the members focused on developing a fair and financially viable VSS for USC employees, which would facilitate an orderly exit for workers and ease the transition. Members of the committee examined various aspects of the VSS, including its potential size, fiscal impact, and the legal and operational challenges associated with its implementation. They also evaluated the implications of the scheme's rollout and its potential effects on the workforce. In addition to the VSS, the committee recommended that the Privatisation Commission be consulted on the optimal structuring and feasibility of the privatisation process, or alternatively, the possibility of asset sales tied to USC operations. Also Read: Utility Stores employees announce nationwide protest over layoffs To facilitate a more thorough analysis, the chair has constituted a sub-committee, led by the Secretary of the Establishment Division. The sub-committee will delve into the legal and operational aspects, size, and structure of the proposed VSS and submit its findings to the main committee by the end of the week. The closure of USC, part of the government's broader privatisation plan, is set to reshape the retail landscape, though its impact on employees and consumers remains a point of ongoing concern.
Business Recorder
3 days ago
- Business
- Business Recorder
Govt set to shut utility stores by July 31
The federal government is all set to shut down its public retail sector, the Utility Stores Corporation (USC) by July 31, it was learnt on Wednesday. The development came into light during a high-level meeting of the committee constituted by the Prime Minister to oversee the closure and privatisation of the USC today at the Finance Division, with Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, in the chair, read a statement released by the Finance Division. The committee has been tasked with ensuring a smooth and transparent closure process, formulating a suitable Voluntary Separation Scheme (VSS) for USC employees, and recommending a structured timeline for privatisation. During the meeting, the committee reviewed the progress made in light of the tasks assigned and held detailed deliberations on the way forward. Govt mulls closing utility stores nationwide, says Aon Abbas It was reaffirmed that, in accordance with the government's directives, all operations of USC will be closed by 31st July 2025. The committee also discussed at length the formulation of a fair and financially viable VSS for the USC employees. As per the statement, the committee 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 Privatisation Commission be consulted regarding the optimal structuring and feasibility of privatisation, or asset sales linked with the USC operations. Moreover, to facilitate a comprehensive analysis, the chair constituted a subcommittee headed by the Secretary Establishment Division. 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 allow the committee to consolidate its findings and finalise its report and recommendations to be submitted to the Prime Minister in line with the Terms of Reference.
Express Tribune
03-07-2025
- Business
- Express Tribune
4,000 USC staff to be laid off through VSS
The federal government has decided to terminate nearly 4,000 permanent employees of the Utility Stores Corporation (USC) through a Voluntary Separation Scheme (VSS) before proceeding with the corporation's privatisation. 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.
