Pakistan’s federal government confirmed on July 16, 2025, its plan to shut down the loss-making Utility Stores Corporation (USC) by July 31, amid escalating financial burdens. Officials formed a committee to evaluate a voluntary separation scheme (VSS) for 11,421 employees, which could potentially cost over Rs29 billion.
Finance Minister Muhammad Aurangzeb chaired the meeting, where participants discussed privatisation timelines and operational inefficiencies. The Ministry of Finance highlighted USC’s Rs6.1 billion operating loss in the first half of FY25, pushing accumulated losses to Rs15.9 billion. This decision aims to curb fiscal drains from subsidies and poor management.
The government attributes the shutdown to high liabilities, ineffective use of subsidies, and operational flaws. USC relies heavily on delayed government subsidies, creating cash flow crises. Poor inventory management exacerbates fiscal risks.
The SOEs report reveals a 50% drop in sales compared to last year, reflecting a loss of market share. USC’s balance sheet shows a weak equity of Rs1.8 billion against Rs50.7 billion in current liabilities, indicating solvency threats and a negative working capital position. The entity operates on a subsidy-driven model, which is unsustainable without reforms such as privatisation or digitisation.
Golden Handshake Scheme for Utility Stores Corporation Employees
The committee recommends a fair VSS, with a subcommittee led by the Secretary of the Establishment Division to assess the legal, operational, and fiscal aspects of the proposal. They will submit their findings by the end of the week.
Employee details and estimated costs:
- Regular employees (5,217): Rs22.8 billion, including terminal dues and house rents. Those with over 20 years of service receive two basic pays per year; those with under 20 years receive three pays or 125% of the remaining months (the higher option).
- Contractual employees (3,319): Rs3.5 billion, two pays per completed year.
- Daily wagers (2,885): Rs2.9 billion, two salaries per completed year.
The committee consulted the Privatisation Commission to assess the feasibility of various options, including the sale of assets. The USC owns 21 properties and is dealing with unpaid subsidies totalling Rs 50 billion.
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