ECC decides to make USC functional again

Directs adviser on commerce to come up with proposals for price stability

ISLAMABAD: Economic managers have decided to make Utility Stores Corporation (USC) completely functional again in a bid to stabilise prices of commodities as they are apparently irked by the rise in food product prices.

The Economic Coordination Committee (ECC), in a recent meeting, directed Adviser on Commerce, Textile, Industries, Production and Investment Abdul Razak Dawood to come up with a comprehensive report within a month with recommendations for transforming USC into an active and useful organisation for maintaining price stability.

After the Pakistan Tehreeke-Insaf (PTI) government took reins of power in August, the adviser on commerce decided to shut down USC by stopping all procurement of commodities. The ban on procurement led to a constant decline in its revenues.

Now, the ECC has tasked the adviser with making suggestions in order to make the USC fully functional again to stabilise prices of food commodities. During discussion, the Power Division secretary pointed out that prices of tomatoes would fall substantially after supplies from Punjab came to the market.

The railways minister was of the view that USC was established in an effort to stabilise prices of food commodities and make them affordable for the poor. However, he said, it seemed that USC was not running effectively which was why prices had gone up.



It was emphasised that market committees were not playing their due role in investigating the hike in prices of food items. These market committees are functioning under the provincial governments. The ECC noted that there was a dire need to make USC a more active and useful enterprise. Sales of USC had declined to Rs49 billion from Rs94 billion a few years ago. Its losses crossed Rs4 billion.

USC provides daily-use commodities to the low-income group at discounted rates. It has 5,500 retail outlets across the country and 14,500 employees are working on its outlets. At present, USC has inventory worth Rs4.5 billion and its monthly sales are around Rs1 billion. During tenure of the previous Pakistan Muslim League Nawaz (PML-N) government, USC had turned into a defaulter.



Earlier, it was running as a profit-making enterprise during the rule of Pakistan Peoples Party (PPP) government. Pakistan International Airlines and Pakistan Steel Mills have also been running on bailout packages for a long time due to billions of rupees worth of losses they have faced. USC suffered a loss of Rs1.36 billion in the first quarter of financial year 2017-18 with negative equity of Rs1.808 billion and outstanding payments of Rs5.6 billion to vendors. Consequently, most of the vendors halted supply of commodities to the corporation.

In 2010-11, USC reported a profit of Rs843.19 million and subsidy receipts amounted to Rs8.9 billion. Its profit dropped to Rs775.28 million in 2011-12 whereas the subsidy increased to Rs12.4 billion. In 2012-13, the profit surged to Rs1.399 billion and the subsidy was also enhanced to Rs18.53 billion. However, USC switched from profit to loss in 2013-14 and its loss stood at Rs202.32 million with subsidy of Rs12.544 billion.

The loss continued to swell and reached Rs3.94 billion in 2016-17. Sales also decreased from Rs68.91 billion to Rs57.91 billion in the year. The Ministry of Industries and Production blamed the loss on the inclusion of private-sector directors in the USC board who had no experience of working with such corporations.