ISLAMABAD: The government on Thursday approved Rs25 billion in severance package in order to sack another 6,878 employees of Utility Stores Corporation (USC), bringing down the curtain on a half-a-century-old entity that served the underprivileged with subsidised goods through its 5,600 outlets.
Established in 1971, the USC had been catering to the needs of underserved people by providing them essential food items at subsidised rates and also acted as a price moderator.
However, after years of mismanagement due to the appointment of inexperienced people at managerial positions, the USC ran into losses, prompting the government to close it.
“The Economic Coordination Committee of the cabinet approved a technical supplementary grant of Rs30.2 billion to ensure the smooth closure of USC,” stated the Ministry of Finance after the ECC meeting.
Military ruler Yahya Khan had established the USC. Later, the government of General Pervez Musharraf expanded the USC network from 1,023 to 5,557 stores. But the government of Prime Minister Shehbaz Sharif decided to shut it down to save annual losses of Rs2 billion.
Pervez Musharraf’s government had increased the USC network to the Union Council level, pushing up the number of outlets from 1,023 to 5,557 and staff from 3,892 to 12,749 by 2009, the ECC was informed.
Out of the Rs30 billion, an amount of Rs25 billion has been approved for laying off 6,878 regular, contractual and daily-wage employees. The remaining Rs5 billion has been given to clear vendors’ claims, pay previous months’ salaries and for the salaries of temporarily retained 832 employees, who will also be fired within a year.
The finance ministry said that the decision represented a major step towards responsibly addressing the longstanding financial burden of USC on the national exchequer, while also safeguarding the interests of employees affected by the closure.
“By approving severance, compensation and payment of outstanding dues, the government is ensuring that workers receive their entitlements, thereby cushioning the social and economic impact of winding up the USC,” said the ministry.
The ECC was informed that the cumulative losses of USC in the past 12 years were Rs23.8 billion as of June 2025, less than Rs2 billion per annum. The Rs24 billion losses in 12 years were equal to 34% of the annual Rs70 billion worth of budget the government gives for discretionary spending on parliamentarians’ schemes.
The ECC also decided that the Ministry of Industries & Production would further rationalise the financial requirements for the closure of USC. It was decided that the assets of USC, including properties, would be disposed of in the current financial year, so that the cost of closure was partially met through sale proceeds.
However, the ECC was informed that 21 properties of USC could not be easily disposed of, as the corporation did not have ownership of many of those properties.
A preliminary assessment conducted by the State Bank of Pakistan (SBP)-approved surveyors informed the government that the total value of those 21 assets was in the range of Rs10.5 billion to Rs12.6 billion. Out of these properties, the title of properties belonging to the Roti Corporation of Pakistan, acquired by USC from the Privatisation Commission, was not transferred to USC.
The industries ministry stated that these properties first need to be transferred to USC and it may involve additional costs.
The industries ministry had asked PM Sharif in June this year to either close USC by July 31, 2025 or continue its operations until privatisation with a grant of Rs14 billion to clear vendor liabilities and stabilise the cash flow.
However, the PM decided to shut down the entity and constituted a committee, headed by Finance Minister Muhammad Aurangzeb, to oversee the closure, early privatisation and the modalities for payment of severance packages to the regular employees.
On July 31, 2025, the USC ceased its operations nationwide and started shifting stocks from stores to warehouses for disposal.
The ECC on Thursday approved Rs13.2 billion for the severance package for regular employees and Rs5.8 billion for the dues of regular and contract employees. It also approved Rs2.2 billion to Rs6.4 billion for payments to the sacked contractual and daily-wage employees. But the final figure will depend on negotiations between the employees’ union and the government.
The government approved Rs1.5 billion for the payment of salaries for the first half of April and for bearing operational expenses for July and August 2025. A sum of Rs630 million was approved for keeping 832 staff members from September to November 2025 and another Rs805 million for the retention of 326 employees from December 2025 to June 2026.
It approved Rs2 billion for the payment of liabilities of vendors while the remaining Rs10 billion would be paid in the next fiscal year.
The ECC directed the law ministry to explore legal avenues for the expeditious disposal of properties within the Privatisation Commission Ordinance framework.
