Rs15 billion sugar subsidy diverted to cover Utility Stores shutdown costs, assets to be sold

The federal government has decided to reallocate Rs15 billion from the current year’s sugar subsidy to fund the closure of the Utility Stores Corporation (USC). The Economic Coordination Committee (ECC) approved a Rs30 billion plan to facilitate the winding down of USC’s operations, despite concerns raised about budgetary shortfalls.

During the recent ECC meeting, the Finance Division highlighted the lack of budgetary allocation for the closure costs, prompting the committee to direct the Ministry of Industries & Production to rationalise the fund requirement through discussions. 

Accoridng to a news report, the government plans to sell USC’s assets, including properties, to finance the operation’s closure, with the proceeds expected to be used to cover costs in the current fiscal year.

The decision follows ongoing financial struggles at USC, which has been running losses since 2013, accumulating a deficit of Rs238 billion by June 2025. USC’s operations were deemed unsustainable, leading to the decision to privatize or close the entity. 

The ECC has been informed that USC’s closure process is progressing, with plans to retain a reduced workforce for property disposal and final tasks until mid-2026. The committee also emphasized expediting the sale of USC’s assets, with an estimated value of Rs10-12.6 billion based on preliminary surveys.

The Ministry of Industries & Production has sought ECC approval for a supplementary grant of Rs30.216 billion to cover severance costs, terminal dues, and compensation for employees, as well as other operational expenses. The committee has approved the plan with the stipulation that asset disposals will be closely monitored to meet the financial obligations.

Earlier, the Prime Minister had approved the closure of USC by July 31, 2025, and set in motion a process to lay off workers and reduce the scale of operations. As of August 2025, USC ceased nationwide operations, and the process of laying off workers and transferring assets to warehouses commenced. However, challenges remain, with unpaid salaries and ongoing disputes with workers’ unions over severance packages.

The fate of USC’s workers remains uncertain, with some staff expected to remain employed until mid-2026, albeit with reduced roles and compensation. The government is working to address these challenges while ensuring the finalization of USC’s closure.