Islamabad:
On Wednesday, the government confirmed its decision to close Losmaking Utility Stores Corporation from the end of this month and constituted a panel to consider giving a golden handshake to 11,421 employees who could 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 ordinary 5,217 employees. The discussions took place during a meeting of a committee composed by the Prime Minister to oversee the closure and privatization of Utility Stores Corporation (USC).
Finance Minister Muhammad Aurangzeb was chairman of the meeting, which was attended by other cabinet members.
The committee has been tasked with ensuring a smooth and transparent closure process, formulating an appropriate VSS for USC employees and recommending a structured timeline for privatization, the Ministry of Finance said.
The Ministry of Finance said the committee reviewed the progress made in the light of the tasks assigned to it and held detailed considerations on the way.
“It was confirmed that in accordance with the government’s directives, all USC operations will be closed by July 31, 2025,” according to the Ministry of Finance. In the long run, the committee discussed the formulation of a fair and economically viable voluntary separation scheme (VSS) for USC employees, added it.
Handling units such as the USC fought with high obligations, inefficient subsidity utilization and operational inefficiency, according to SOES performance report, that the Ministry of Finance released last week. It added that dependence on delayed public subsidies creates cash flow crisis, while poor inventory management exacerbates fiscal risk
The Ministry of Finance’s report stated that the USC lost RS6.1 billion at the operating level during the July-December period with the last financial year and that it was full of financing costs, which added the burden due to compound loss of work.
The USC model is the subsidy drive rather than market, and cumulative losses amounted to RS15.9 billion from December last year, according to the Ministry of Finance. It added that the balance revealed a slight equity of only RS1.8 billion, greatly overshadowed by current obligations of the RS50.7 billion, reflecting solvency risks and negative operating capital.
According to the official documents, there were a total of 11,421 employees in the USC, including 5,217 ordinary employees. The total cost of the golden handshake is estimated at RS29.2 billion, including RS22.8 billion for ordinary employees. However, these figures are not final and the cost of the severance package is determined by another committee.
The details showed that the ordinary employees who had over 20 years of association with the USC would receive two running basic wages in the final years, while those who have less than 20 years of experience will either get three who run basic salary in the final years or 125% of the basic salary in the remaining months, whichever is higher.
The ordinary employees also receive terminal quota and rent.
There are 3,319 contractual employees who are proposed to receive two ongoing basic salary in the completed years as compensation, which will cost RS3.5 billion. Another 2,885 are the daily efforts proposed to be proposed two wages in the final years that will cost RS2.9 billion.
The unit has 21 properties, and it also faces a big question about non -payment of promised subsidies of over $ 50 billion. RS by the Ministry of Finance.
The Ministry of Finance stated that the members examined various dimensions of the proposed VSS during the meeting, including its expected size, potential tax influence and legal and operational implications associated with its structure and rollout. The Committee recommended that the Privatization Commission be consulted on the optimal structuring and feasibility of privatization or alternative asset sales associated with the USC operations.
In order to facilitate a comprehensive analysis, the President constituted a subcommittee led by the Secretary Establishment Division, the ministry said.
The Committee will include representatives from the Finance Division and Industries & Production Division to investigate 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 conclusions and conclude its report and recommendations to be submitted to the Prime Minister in accordance with the reference conditions, the Ministry of Finance said.
The SOES report stated that USC’s heavy dependence on state aid and falling sales highlighted systemic inefficiencies. The USC reflects a structurally weak and ineffective business model that is unsustainable without continuous state grants.
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 maintain the market share or operate competitively. However, one of the reasons for a fall in sales was the government’s decision to settle the unit.
The report emphasized that without structural reform, including privatization, supply chain udigitization, direct receiving target (DBT) of subsidies and conversion to a lean wholesale model, the USC will continue to drain fiscal resources without viable path to self -smearability.
