The federal government of Pakistan has greenlit the sale and disposal of assets belonging to the Utility Stores Corporation (USC) within the current financial year, aiming to ease mounting financial pressures. Officials stated that the proceeds would primarily be used to clear vendor liabilities and settle pending employee dues. Additionally, the Ministry of Industries and Production plans to allocate Rs15 billion this year to address sugar subsidy arrears owed by the Trading Corporation of Pakistan as part of broader cash management efforts.
A Brief History of USC and Its Financial Struggles
Founded on 3 September 1971, USC was intended to provide essential food items at subsidized rates, helping stabilize prices for consumers. The corporation underwent rapid expansion after 2007, growing its outlets from 1,023 to 5,557 and staff from 3,892 to 12,749 by 2009. While this growth widened access, it also intensified operational costs and the subsidy burden. USC began reporting losses in 2013, and by June 2025, accumulated losses had reached Rs23.8 billion, with projected annual deficits of roughly Rs8.315 billion.
In 2024, the federal cabinet categorized USC under Phase Two of the active privatization list. Subsidies were discontinued shortly afterward, and a rightsizing initiative slashed stores from 3,742 to 1,904 and staff from 11,614 to 7,710 by February 2025. Despite these measures, the corporation continued to run at a loss, prompting the government to weigh its options.
Government Approves Closure Over Continuation
On 28 June 2025, the government presented two options to the prime minister: either shutter USC operations by 31 July 2025 or continue operations until privatization with a Rs14 billion grant to cover vendor liabilities and stabilize cash flow. The prime minister opted for closure, with a committee under the finance minister tasked to oversee early privatization and voluntary separation arrangements for employees.
Following the closure decision, USC shut 1,059 rented stores and 1,230 franchise outlets between 3 and 14 July 2025. This move sparked protests from unions and collective bargaining agents, who staged a sit-in at the USC headquarters in Islamabad. Negotiations led by the prime minister’s special assistant on political affairs concluded by 31 July, allowing the closure process to resume.
Severance Packages and Employee Compensation
The finance committee finalized a severance plan costing between Rs16 billion and Rs19.5 billion. Key allocations include:
- Rs13.225 billion for regular employees
- Rs5.067 billion for terminal dues and related payments, plus Rs684 million for widows of deceased staff
- Rs2.192–6.337 billion for contractual and daily wage employees, pending union negotiations
Officials emphasized that these one-time payments to contract staff will not set a precedent. Many USC employees had already missed full salaries for July and August 2025, and partial pay for April 2025. A further Rs1.467 billion was earmarked to cover salaries for 7,710 staff and immediate operational needs.
Phased Workforce Reduction
Retail operations ceased nationwide on 31 July 2025, with stock being relocated to warehouses for disposal. The bulk of staff will be laid off by 31 August 2025. From September to November, a reduced workforce of 832 employees will oversee 88 warehouses and 44 regional offices to complete audits, stock reconciliation, auctions, and ongoing litigation. By December 2025, this number will drop to 326 employees to facilitate final asset disposal, costing Rs115 million monthly.
Asset Valuation and Disposal Challenges
The finance committee has instructed USC to secure updated valuations for 21 properties, with preliminary estimates ranging between Rs10.5 billion and Rs12.6 billion. Some properties, acquired via the Privatization Commission, require formal title transfers before sale—a process that may delay proceedings and incur additional costs. Leasehold restrictions and building certification requirements on other properties also add complexity.
To expedite asset sales, the law and justice division is exploring legal avenues under the Privatization Commission Ordinance 2000. A detailed cash flow plan presented on 22 August 2025 outlines monthly inflows and outflows, underscoring the urgency of early property disposal to meet liabilities.
Funding Plan and Outlook
The Economic Coordination Committee is considering a supplementary grant of Rs30.216 billion to support the Ministry of Industries and Production, covering:
- Severance and terminal dues
- Salaries and operational costs
- Transitional workforce retention
- Vendor liability settlements
- Asset disposal expenditures
Officials stress that USC’s financial position remains precarious, with insufficient funds to meet staff salaries and other obligations. Early disposal of assets and legal clearance of titles are viewed as critical steps to mitigate fiscal pressure while ensuring employee compensation. The government will closely monitor auction valuations and payments throughout the process.
