Millions at risk as govt plans closure of utility stores nationwide

Senate committee briefed on auto policy; officials stress need for warehousing expansion in Pakistan

PAKISTAN:

The federal government is moving towards closing utility stores nationwide, a move expected to severely impact millions of low-income families who have long relied on discounted essential goods.

This follows the government’s decision to halt a Rs50 billion subsidy, which previously offered significant relief to around 26 million deserving households.

During a recent Senate Standing Committee meeting on Industry and Production, the Secretary of Industry confirmed that the government is considering shutting down utility stores as part of a right-sizing initiative. Driven by financial constraints, the plan aims to redirect funds initially designated for the utility stores subsidy towards alleviating the energy crisis, particularly by offering relief on electricity bills.

The subsidy, which provided up to 25% discounts on essential items like flour, ghee, rice, sugar, and pulses, has already been discontinued. These goods will now be sold at regular market prices, stripping low-income families of the savings they once relied on.

The secretary of industry stated that an action plan for the stores’ closure is under development, with a package for affected employees under consideration.

Auto policy, warehousing, and industry discussions

In addition to the utility stores discussion, the Senate Standing Committee was briefed on the country’s auto policy. Officials from the Ministry of Industry and Production highlighted the growing need for warehousing in Pakistan.

A summary proposing warehousing as an industry is under consideration by the federal cabinet, with the Economic Coordination Committee (ECC) already granting approval. The committee expressed full support for the warehousing policy.

The officials further disclosed that Pakistan produces fewer than one million cars annually. In the electric vehicle sector, 45 licences have been issued for producing motorcycles and rickshaws. Currently, 13 car brands operate in the country, and up to five million cars could be manufactured domestically. Last fiscal year, Rs300 billion was collected in taxes from car sales.

Concerns were raised by Senator Saleem Mandviwalla regarding the quality of cars manufactured in Pakistan, which he argued are not export-standard. 

Officials noted that while tractors and rickshaws are being exported, the 4% export target for vehicles was missed this year, as companies failed to secure export orders and obtained a stay order from the court. Additionally, the government did not provide export incentives.

Chairman of the Committee, Senator Aon Abbas Buppi, inquired about under-invoicing in the import of MG vehicles. Senator Mandviwalla responded that the issue had been resolved by the court.