The federal government has decided to sell and dispose of Utility Stores Corporation (USC) assets within the current financial year. Officials said proceeds will help clear vendor liabilities and pay staff dues. The Ministry of Industries and Production (MoI&P) will use Rs15 billion that is available this year to clear sugar subsidy arrears of the Trading Corporation of Pakistan as part of cash management.
Utility Stores Corporation was set up on 3 September 1971 to sell essential food items at subsidised rates and to moderate prices. The network expanded sharply after 2007. Outlets grew from 1,023 to 5,557 by 2009. Staff rose from 3,892 to 12,749 by 2009. The expansion increased the subsidy burden and the cost of operations. The USC began posting losses in 2013. Accumulated losses reached Rs23.8 billion by June 2025. Projected annual losses were around Rs8.315 billion.
On 13 August 2024, the federal cabinet placed USC in Phase Two of the active privatisation list. On 16 August 2024, the federal government discontinued subsidies for the corporation. The USC board approved a rightsizing plan in December 2024. As a result, stores were reduced from 3,742 to 1,904, and staff fell from 11,614 to 7,710 by February 2025. Despite rightsizing, the losses continued. The government presented two options to the prime minister on 28 June 2025. Option one was the closure of operations by 31 July 2025. Option two was continuation until privatisation with a Rs14 billion grant to clear vendor liabilities and to stabilise cash flow. The prime minister approved closure by 31 July 2025. A committee under the finance minister will oversee the closure, early privatisation and voluntary separation arrangements for regular employees.
The board approved closure on 31 July 2025. Between 3 July and 14 July 2025, USC closed 1,059 rented stores and 1,230 franchise outlets. Collective bargaining agents and staff unions staged a sit-in at USC headquarters in Islamabad and paused the process. The prime minister sent a committee led by the special assistant on political affairs to negotiate with unions. The sit-in ended after meetings on 25 July and 31 July 2025. The finance committee met on 16 July and on 15, 20, and 22 August 2025 to review closure steps.
Severance Package
The committee finalised a layoff package costing between Rs16 billion and Rs19.5 billion. The package includes a severance of Rs 13.225 billion for regular employees. Terminal dues and related payments total Rs5.067 billion for employees, plus Rs684 million as compensation for widows of employees who died in service. A compensatory payment for contractual and daily wage staff will range from Rs2.192 billion to Rs6.337 billion and will be finalised after negotiation with unions. Officials said the one-time payment to contract and daily wage staff will not be used as a precedent. USC staff stopped receiving salaries for the full months of July and August 2025 and for half of April 2025. The committee said Rs1.467 billion is required to pay salaries for 7,710 employees and to meet immediate operational costs.
USC stopped retail operations nationwide on 31 July 2025 and began shifting stock from stores to warehouses for disposal. The corporation plans to lay off the majority of staff by 31 August 2025. From September to November 2025, about 832 staff will be retained to manage 88 warehouses and 44 regional offices and to complete audit stocktaking, reconciliation, auctions and litigation work. This transitional workforce will cost about Rs 210 million per month. From December 2025 to June 2026, a further reduced staff of 326 will remain to help dispose of assets at a monthly cost of about Rs115 million.
Asset Disposal
The finance committee instructed USC to obtain fresh valuations for 21 properties to meet liabilities. Preliminary surveys by approved valuers put the asset value between Rs10.5 billion and Rs12.6 billion. Some properties were acquired from the Privatization Commission through Roti Corporation of Pakistan, and the original titles have not yet been transferred. To sell those properties, the titles must be transferred to USC, which may add cost and delay. Other properties face leasehold restrictions that require building completion certificates or are liable for commercialisation charges. Completing records and obtaining permissions will need additional expenditure. The committee asked the law and justice division to explore expedited legal routes under the Privatization Commission Ordinance 2000 to speed transfers and auctions.
A detailed cash flow plan mapping monthly inflows and outflows was presented to the committee on 22 August 2025. The committee urged early disposal of properties to generate funds. It asked the finance ministry and USC to prepare monthly receipts and payments schedules. The Economic Coordination Committee was requested to approve a supplementary grant of Rs30.216 billion for the Ministry of Industries and Production. The breakdown is Rs13.225 billion for severance of regular staff Rs5.751 billion for terminal payments and compensation for widows Rs2.192 billion to Rs6.337 billion for contractual and daily wage staff Rs1.467 billion for salaries and operational costs Rs630 million to retain 832 staff for September to November 2025 and Rs805 million to retain 326 staff for December 2025 to June 2026 Rs2 billion for vendor liabilities and a remaining Rs9,935 million to be budgeted in the financial year 2026-27.
Officials said the financial condition of Utility Stores Corporation remains critical, with no funds to pay salaries, severance and other dues. Early asset disposal and clear legal title transfer are central to the plan to settle liabilities and to limit the burden on public finances. The government will monitor auction valuations and staff payments as the sale process unfolds.