Islamabad:
On Wednesday, the government reaffirmed its decision to close the public loss store company from the end of this month and formed a panel to consider a golden handshake at 11,421 employees who could cost it more than 29 billion rupees.
It was not clear if the government would give the package unharmed to 11,421 employees or would limit it to 5,217 regular employees. The discussions took place during a meeting of a committee constituted by the Prime Minister to supervise the closure and privatization of the Utility Stores Corporation (USC).
The Minister of Finance, Muhammad Aurangzeb, chaired the meeting, which attended other members of the cabinet attended.
The committee was responsible for ensuring a fluid and transparent closing process, for formulating an appropriate VSS for USC employees and recommending a structured calendar for privatization, the Ministry of Finance said.
The Ministry of Finance said that the Committee had examined the progress made in the light of the tasks assigned to it and held detailed deliberations on the path to follow.
“It has been reaffirmed that, in accordance with the directives of the government, all USC operations will be closed by July 31, 2025”, according to the Ministry of Finance. The Committee has discussed long, the formulation of a fair and financially viable voluntary separation regime (VSS) for USC employees, he added.
According to the report on the performance of ineffective subsidies and USC entities, fought against high responsibilities, use of ineffective subsidies and operational ineffectiveness that the Ministry of Finance published last week. He added that dependence on government government subsidies creates a cash flow crisis, while poor stock management aggravates tax risks
The Ministry of Finance report said that the USC had lost 6.1 billion rupees in terms of operation during the July-December period of the last financial year and was riddled with financing costs, adding to the charge due to composed operational losses.
The USC model is subsidy loss rather than the market and Cumulative RS1.9 billion in December of last year, according to the Ministry of Finance. He added that the balance sheet revealed small equity of only 1.8 billion rupees, strongly overshadowed by current liabilities of 50.7 billion rupees, reflecting the risk of solvency and the negative working capital.
According to official documents, there were a total of 11,421 USC employees, including 5,217 regular employees. The total cost of the golden gross handle is estimated at 29.2 billion rupees, including 22.8 billion rupees for regular employees. However, these figures are not final and the cost of the starting package will be determined by another committee.
Details have shown that regular employees with more than 20 years of association with the USC would obtain two basic wages for finished years while those who have less than 20 years of experience will obtain three basic wages of the finished years or 125% of the basic remuneration of the remaining months, according to the highest.
Regular employees will also obtain terminal contributions and rent rents.
There are 3,319 contractual employees who are offered to receive two basic wages for years finished in compensation, which will cost 3.5 billion rupees. 2,885 others are daily bets that are offered to receive two wages for finished years which will cost 2.9 billion rupees.
The entity has 21 properties and it also faces a major problem of non-payment of promised grants of more than 50 billion rupees by the Ministry of Finance.
The Document of the Ministry of Finance said that during the meeting, the members had examined various dimensions of the proposed VSS, including its projected size, its potential budgetary impact and its legal and operational implications associated with its structure and its deployment. The Committee has recommended that the privatization committee be consulted concerning optimal structuring and feasibility of privatization or alternately asset sales related to USC operations.
To facilitate a complete analysis, the president has constituted a subcommittee led by the secretary’s establishment division, said the ministry.
The Committee will include representatives of the finance and industry and production division to examine the legal and operational aspects, the contours, the size and structure of the proposed VSSs and submit its report to the main committee by the end of the week.
This will allow the Committee to consolidate its conclusions and finalize its report and recommendations to be submitted to the Prime Minister in accordance with the reference conditions, said the Ministry of Finance.
The SOES report said that the high dependence of the USC with regard to government subsidies and the drop in sales highlighted systemic ineffectures. The USC reflects a structurally low and ineffective business model which is not durable without continuous government subsidies.
The report has shown that business sales have dropped by more than 50% compared to the same period last year, which shows the incapacity of the company to keep the market share or to work competitively. However, one of the reasons for falling sales was the government’s decision to finish the entity.
The report underlined that without structural reform, in particular privatization, the digitization of the supply chain, the direct targeting of beneficiaries (DBT) of subsidies and the conversion to a large lean model, the USC will continue to drain the budgetary resources without viable path to self-durability.
