USC closure
The government's decision to shutter the loss-making Utility Stores Corporation (USC) by the end of July is a painful but necessary corrective to decades of fiscal bleeding. Between July and December 2024 alone, USC lost over Rs6 billion and has net liabilities of over Rs50 billion. Meanwhile, despite offering low prices, USC actually saw sales crash by 50% in recent times.
This also puts the estimated Rs29 billion needed for golden handshakes into perspective. If no action was taken, USC would have spent the same amount just to keep running over the next few years. Although the government is considering limiting payouts to only 5,217 'regular' employees, after wasting billions for decades, skimping on severance pay is not the way to go.
Future savings can still be reallocated to more productive initiatives that support low-income citizens. In the meantime, the government must ensure price control enforcement in areas that were highly reliant on utility stores to minimise the impact of closures on shoppers who actually relied on them. While a resolution for USC appears nearly finalised, progress on the much-publicised privatisation deals of other SOEs has been minimal.
PIA has failed to attract suitable bidders despite multiple attempts, and the recent deal with Russia to revive Pakistan Steel Mills may backfire. None of the two dozen SOEs up for privatisation have sparked the kind of interest that would inspire government confidence.
The closure of USC proves the government can make tough choices. Now, it must accelerate the pace of decision-making - from years to weeks — because, like USC, many state-owned enterprises are losing so much money that waiting to sell them for cents on the dollar could end up being more costly than shutting them down and salvaging what remains.
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Express Tribune
10 hours ago
- Express Tribune
PIA plans UK flights from Aug 14
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During the last failed attempt to privatise PIA, the government set the investment limit at $300 million and the new limit appeared on the lower side compared to the last time. One of the possible reasons can be the assumption of improved profitability due to opening of international routes to Europe and the United Kingdom and tax exemptions on lease of aircraft. Usman Bajwa said that PIA has decided to start flights to Manchester from August 14 after the United Kingdom lifted a ban on PIA flights. The ban had been imposed after the last PTI government claimed that the PIA pilots had bogus degrees. The advisor to Prime Minister on Privatisation Muhammad Ali said after the meeting that the airlines total investment requirements would be assessed once the audited financial accounts for end June period are available by mid of next month. The Secretary Privatisation said that there were security concerns regarding PIA's North America routes but efforts were underway to address and clear these concerns. The investor will retain 85% of the bid amount to invest the money in the airline. The government will get only 15% of the bid money. The PIA fleet age has also risen to 18 and a half years and the new investor would have to double the fleet within five years, said the secretary. The CEO of PIA said early this month that the airline was currently flying 19 aircraft. The government had earlier claimed that the PIA showed Rs26 billion profit last year but a report by the Ministry of Finance busted the claim and stated that the airline in fact incurred a net loss of Rs4.6 billion and one-off "accounting profit" of Rs26 billion due to treating past losses as future assets "should not be misinterpreted as a sign of operational profitability". The government wants to sell 51% to 100% stakes along with the management control. It had also made an attempt to privatize PIA last year but ended up receiving Rs10 billion bid against Rs85.03 billion minimum price. The standing committee also reviewed a report highlighting complaints of the pensioners of PIACL. It was also revealed that currently pension liabilities for 6,625 employees of PIA amounted to Rs14. 9 billion. Expressing concern, Chairman Committee Senator Dr. Afnan Ullah Khan remarked that the pension amount was extremely low, asking how people are expected to survive. In response, the Ministry of Privatization stated that pension policies are regularly revised and updated annually in line with allowances. The Chairman directed that grade and scale wise pension details, including the amount received and the distribution process, be presented in the next meeting of the committee The secretary said that the due diligence process for pre-qualified companies has begun and the field visits would start soon. He said that starting next week; pre-qualified companies will conduct site visits and participate in expert sessions. These sessions will include briefings on aircraft conditions and routes, as stated by Usman Bajwa. The Privatisation Commission officials said that the current business model of PIA was not sustainable. They said that the privatisation prospects have increased after Rs45 billion worth more liabilities were taken off the balance sheet of PIA and parked in the new holding company. They said that the last failed attempt will not affect the new bidding process. The Secretary Privatisation said that the government was earlier providing Rs100 billion annually to keep PIA operational. The Committee was informed that the Pakistan Minerals Development Corporation (PMDC) is not yet included in the Privatization list. Senator Zeeshan Khanzada questioned why this institution was being privatized. Senators further queried the basis of the privatization decision, noting that the Petroleum Ministry lacks the mandate to privatize the PMDC. Regarding Zarai Taraqiati Bank Limited (ZTBL), the committee was informed that it is included in phase one of the privatization list approved by the government in August 2024. ZTBL is currently in the process of hiring a financial advisor. The Chairman Committee questioned the delay in hiring a financial advisor, noting that the last meeting was held on January 31st, when the bids were submitted and evaluated. He expressed concern that nearly six months had passed without finalizing the appointment. The ministry responded that the process typically takes six to eight weeks but was delayed due to high fee demands by one party by nearly Rs500 million, which is forcing a restart of the process.
Business Recorder
13 hours ago
- Business Recorder
Revised business plan: PIA buyer required to invest Rs70bn in 5 years: PC
ISLAMABAD: Privatization Commission Secretary Usman Akhtar Bajwa, Tuesday, informed the Senate Standing Committee on Privatization that the buyer of Pakistan International Airlines Corporation Limited (PIACL) will be required to invest Rs70 billion over five years period under revised business plan of privatisation of PIA. A meeting of the Senate Standing Committee on Privatization was held under the chairmanship of Senator Dr Afnanullah Khan. The meeting was attended by senators Zeeshan Khanzada, Bilal Ahmed Khan, Nadeem Ahmed Bhutto, Mohsin Aziz and other officials from Ministry from Privatization, Power Division and Zarai Taraqiati Bank Limited (ZTBL). Aviation panel told: PIACL sell-off process almost over Secretary Privatization Commission, while sharing the revised business plan of privatization of the national flag carrier, stated that the due diligence process has begun for pre-qualified companies in the PIA privatization. Starting next week, site visits and expert sessions will begin for pre-qualified companies. Expert sessions will include briefings on aircraft conditions and routes, said Usman Bajwa. To a query, he said that a decision has been taken to launch PIA flights to Manchester starting from August 14. However, there are security concerns for PIA's North American routes. Efforts will be made to resolve security concerns regarding North American routes. He stated that PIA's current business model is not sustainable. In the previous bidding round, investors backed out because their demands were not met. He further briefed that now, investors will receive sales tax exemption on aircraft purchases. The government had to inject Rs100 billion annually to keep PIA running. The services of the previous financial advisor have been re-engaged for PIA's privatisation. During the meeting, the committee reviewed a report highlighting complaints of the pensioners of Pakistan International Airlines Corporation Limited (PIACL). It was also revealed that currently pension liabilities for 6,625 employees of PIACL amount to Rs14.87609 billion. Expressing concern, Chairman Committee Senator Dr Afnanullah Khan remarked that the pension amount is extremely low, asking how people are expected to survive. In response, the Ministry of Privatization stated that pension policies are regularly revised and updated annually in line with allowances. The chairman directed that Grade/Scale wise pension details, including the amount received and the distribution process, be presented in the next meeting. Privatization Commission informed the committee that the Board of the Privatisation Commission in its July 2025 meeting resolved as under:a) Pre-qualified the following interested parties as prospective bidders/pre-qualified bidders (PQBs): (i) Consortium comprising Lucky Cement Limited, Hub Power Holdings Limited, Kohat Cement Company Limited and Metro Ventures (Private) Limited; (ii) Consortium comprising Arif Habib Corporation Limited, Fatima Fertilizer Company Limited, City Schools (Private) Limited and Lake City Holdings (Private) Limited; iii) Fauji Fertilizer Company Limited, and iv) Air Blue Limited. b) Consortium comprising ASIL and Serene Air (Private) Limited, Bahria Foundation, Mega C&S Holding, Equitas Capital LLC, was not pre-qualified, as it did not meet the requirements of the Request for Statement of Qualification (RSOQ). The PQBs have been invited to conduct buy-side due diligence by giving access to Virtual Data Room. The PQBs will also be invited for pre-bid conference/meetings for finalisation of bid documents, Privatization Commission added. About the privatisation of power distribution companies, secretary Privatization Commission stated that the DISCOs face issues related to asset transfers, ownership of grid stations, and recoveries from government departments. The DISCOs are also facing challenges related to regulatory frameworks, payments to government entities, and pension liabilities and payments. He further said that 51 percent to 100 percent assets of the DISCOs' will be sold. Three DISCOs will be privatised between January and June of the current fiscal year. The committee was informed that the Pakistan Minerals Development Corporation (PMDC) is not yet included in Privatization list. Senator Zeeshan Khanzada questioned why this institution is being Privatized and asked about the purpose behind it. Senator Bilal Ahmed Khan also raised concerns, questioning why land is being granted/allotted if the government plans to privatise the institution. He further asked about the area under PMDC's operation and the quantity of mineral output. Senators further queried the basis of the privatization decision, noting that the Petroleum Ministry lacks the mandate to privatise the PMDC. In response, the minister clarified that the Cabinet Committee on SOEs is responsible for evaluating organisations and that the Petroleum Ministry can better explain its mandate. The committee was briefed on the privatisation process, which involves recommendations to the Board, Cabinet's approval, and hiring of financial/legal advisors through advertisements. The evaluation criteria will then be assessed before final approval. The Chairman Committee Senator Dr Afnanullah Khan proposed that PMDC be invited to the next meeting to further deliberate on this matter. Regarding ZTBL, the committee was informed that it is included in Phase One of the privatisation list approved by the government in August 2024. A total of 24 organisations are to be privatised. ZTBL is currently in the process of hiring a financial adviser. The ministry stated that the negotiations are in progress to finalise how ZTBL will be privatised. Moreover, Senator Dr Afnanullah Khan questioned the delay in hiring a financial adviser, noting that the last meeting was held on January 31st, when the bids were submitted and evaluated. He expressed concern that nearly six months had passed without finalizing the appointment. The ministry responded that the process typically takes six to eight weeks but was delayed due to high fee demands by one party nearly Rs500 million forcing a restart of the process. The ministry assured the committee that the complete privatisation process is now targeted to be completed within nine months. Furthermore, Senator Zeeshan Khanzada raised a critical point upon the overall privatisation process of the entities. He further questioned the rationale behind privatizing the entities while highlighting the performance of the Privatization Commission. He urged that this issue be thoroughly discussed in the committee. Copyright Business Recorder, 2025
Express Tribune
2 days ago
- Express Tribune
Govt secures two-thirds majority in Senate
Two PPP senators tabled a bill in the Senate on Monday to ban boys and girls under the age of 16 from using social media accounts, with a view to regulating the online activities of the minors. The bill, presented by senators Sarmad Ali and Masroor Ahsan, makes the social media companies legally responsible to block the accounts of under-16 persons. In case of violation, the bill stipulates a fine of Rs50,000 to Rs5 million and a prison term of six months. The Pakistan Telecommunication Authority (PTA) will have the authority to implement the law, make procedures and clarify, according to the bill.
