Utility stores: Controversy may arise as govt appoints bureaucrat as USC head

Official defends move, saying PM has powers to make appointments

ISLAMABAD: The government has appointed a bureaucrat as managing director of the cash-strapped Utility Stores Corporation (USC) without seeking applications from interested candidates through advertisements, which may trigger some controversy.

Earlier, the government has given the charge of USC board chairperson to secretary of the Ministry of Industries and Production. Now, another bureaucrat has been appointed managing director in an apparent bid to take control of all matters of the corporation.

USC runs a country-wide network of stores that offer essential and other commodities at lower-than-market prices particularly to cater for the demand from low-income groups.

After Pakistan International Airlines and Pakistan Steel Mills, USC is the third state-owned company that has defaulted on payments during the tenure of the current Pakistan Muslim League-Nawaz (PML-N) government.

Defending the appointment, a senior government official told The Express Tribune that the law allowed the prime minister to make direct appointments in any of the corporations where majority of shares were held by the federal government.

However, this is a unique case where a bureaucrat has been placed as head of a company for three years. In most of the cases, acting charge is given to the bureaucrats or they are appointed on deputation.

The appointment of a regular managing director of USC is essential to plan and execute the upcoming Ramazan relief package.

According to USC’s Memorandum and Articles of Association, its board can appoint the head nominated by the federal government as a majority shareholder for a term not more than three years.

In line with this, three names of bureaucrats were proposed for the post which included Habibur Rehman Gilani (BS-21 officer), Joudat Ayaz (BS-20) and Naeem Jan Khan (BS-20).

The Ministry of Industries and Production had sent a summary to Prime Minister Shahid Khaqan Abbasi who desired to appoint Gilani as the managing director. Later, the summary was tabled before the cabinet which approved the appointment of Gilani.

The present government has been experimenting with USC for a long time as a bureaucrat was also given its charge earlier, but it sparked a dispute with the minister for industries and production.

Later, the number of private board members was increased, which sparked conflict of interests, turning the corporation into a loss-making enterprise.

Now, the control of USC management and board has been given to bureaucrats.

USC had been running on profit during the previous government of Pakistan Peoples Party (PPP). Now, with billions of rupees worth of losses, USC is seeking a bailout package to run its business and affairs smoothly.

It recorded a loss of Rs1.36 billion in the first quarter of current financial year with negative equity of Rs1.808 billion and outstanding bills of Rs5.6 billion which were to be paid to the goods suppliers.

Owing to the delay in payments, most of the suppliers have stopped selling commodities to the corporation.

During the PPP government, USC had earned a profit of Rs843.19 million in 2010-11 with subsidy of Rs8.9 billion for selling commodities at discounted rates. Its profit dropped to Rs775.28 million in 2011-12, but subsidy increased to Rs12.4 billion.

Earnings jumped to Rs1.399 billion in 2012-13 and the subsidy rose further to Rs18.53 billion.

However, after the PML-N government came to power, USC switched from profit to loss which stood at Rs202.32 million in 2013-14 and subsidy amount also came down to Rs12.544 billion.

The loss continued to swell and reached Rs3.94 billion in 2016-17 with sales falling from Rs68.91 billion to Rs57.91 billion. The Ministry of Industries blamed the loss on the inclusion of private board members who had no experience of working with utility stores. 

Published in The Express Tribune, April 21^st, 2018.

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