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Business Recorder
5 days ago
- Business
- Business Recorder
11,614 USC employees removed following closure of 1,925 outlets
ISLAMABAD: The government has shut down 1,925 loss-making Utility Stores outlets countrywide being operated by the Utility Stores Corporation (USC) and 4,060 out of a total 11,614 employees were sacked. Briefing the Senate Standing Committee on Industries and Production held here under the chairmanship of Senator Aon Abbas to discuss matters pertaining to various attached departments of the Ministry of Industries, Managing Director Utility Stores Faisal Nisar Chaudhry said the closure of these outlets has resulted in saving of Rs1.7 billion. The MD USC said that if the management failed to privatise the USC annually Rs7 billion will be required to pay the salaries of the employees. The MD of the USC told the committee that for the time being, the privatisation process had been stopped because of a lack of its audit for two years. 'The privatisation will take place after the audit is complete,' the USC MD said, adding that 5,000 permanent employees would be sent to the surplus pool, while 2,554 employees still on contracts and on daily wage basis would be laid off. He added that the USC was on the government's privatisation list. 'The target is to complete the two-year audit in August 2025' after which the privatisation would be carried out, the MD stated. He also informed the committee that an initial estimate of the USC properties had been made. According to the USC MD, there were 3,742 Utility Stores across the country, out of which, the government has shut down 1,925 loss-making stores. After the privatisation, only 1,500 stores would require staff. He also said that the USC's monthly losses had been reduced to Rs220 million. The chairman committee inquired the present status of Rightsizing in Utility Stores Corporation (USC). The department briefed the committee that restructuring/rightsizing plan aimed at the eventual privatisation of the USC was formally approved by the USC Board of Directors during its 185th meeting held on 27th December 2024. The USC is being restructured under the restructuring plan according to which the loss-making stores of the corporation are going to be closed and surplus staff thereafter is being laid off. As part of the ongoing restructuring plan of USC, 1,925 stores have been closed and around 4,060 employees (1,823 contractual and 2,237 daily wages) have been laid off. It was also disclosed that the USC will not have sufficient funds to pay salaries to its 5,000 employees beyond next month, due to the closure of a significant number of its outlets. The USC officials informed the committee that the secretary had forwarded recommendations at the highest level, requesting that Rs7 billion funds be allocated for USC in the upcoming budget. The MD USC said that the stores were running on government subsidies and now the government has decided to even provide Ramadan relief package through Benazir Income Support Programme (BISP) to needy people. He said that USC's outstanding payment stand at Rs25 billion. The MD USC further stated that the management has decided to offer golden handshake scheme to 25 percent of the USC employees, otherwise, Rs2.7 billion annually will be spent on the salaries of these employees. The chairman committee recommended that details of the employees recruited in 2007 and 2013 should be submitted in the next meeting, from each province providing 10 office orders. This will enable the committee to assess the duration of their contractual appointments. Additionally, it was recommended that representatives from the Board of Directors (BOD), CBA Union, and PC should be invited to the next meeting. The meeting also discussed the role, functions and achievements of Pakistan Industrial Development Corporation (PIDC). The officials, while briefing the panel on PIDC, said that at the time of its creation, Pakistan did not inherit any industrial base as East and West Pakistan combined had only 34 factories out of a total of 921 industrial units in the Subcontinent i.e. 3.6 per cent. They said that the 34 industrial units including, textile mills, cigarettes, rice husking, cotton ginning and flour milling, contributing only 7 percent of GDP and employing only 26,400 people out of an 80 million population at that time. The East Wing produced 70 percent of the world's jute, but there was not a single jute mill and West Bengal (India) was almost the sole buyer. In the West wing, only 16,000 of the total 15,00,000 cotton bales produced could be processed domestically. Further, they told that industrial units setup by PIDC between 1952-1984 were 94 and country's industrial growth during 1953-63 remained around 19.1 per cent which was almost solely due to PIDC. In 2005/06, a number of Section-42 (not-for-profit) Companies and Common Facility Centres were created as wholly-owned subsidiaries of PIDC for intervention in various sectors including gems and jewellery, marble/granite, handicrafts, sporting arms, dies and moulds, technology upgradation for skill imparting, setting up Common Facility Centres and introducing modern technology. The PIDC provided seed money for their establishment. However, the companies had their own independent management and boards, directly appointed by the government, relevant department stated. The committee was informed that the seed money provided is not recovered, rather it is treated as a grant or donation. The committee was apprised of the current status of PIDC projects. It was informed that Bin Qasim Industrial Park – SEZ (Karachi, Sindh), Korangi Creek Industrial Park – SEZ (Karachi), and Rachna Industrial Park – SEZ (Sheikhupura) have been developed. Naushahro Feroze Industrial Park – SEZ (Sindh) is currently under development. Block-A of Karachi Industrial Park – CPEC SEZ has received PC-1 approval (Rs7.4 billion), and the tendering process is underway. Additionally, Sargodha Industrial Park (Punjab) is also being developed. Following the briefing, Senator Saleem Mandviwalla expressed concerns regarding the Port Qasim area, stating that a significant land has no industrial unit established and land is so expensive that an investor would have to spend most of their funds just to acquire the land, leaving little to no resources for setting up the industry. He added that such conditions are unlikely to attract foreign investors, and even if they do come, the challenges are so overwhelming that they eventually withdraw. Copyright Business Recorder, 2025
Business Recorder
21-05-2025
- Business
- Business Recorder
Energy reforms: Familiar tools, new promises
The IMF's First Review under the SBA and approval of Pakistan's Climate Resilient Sustainability Facility (RSF) both place the country's energy sector squarely in focus. From petroleum and electricity to gas, the reform roadmap is extensive — but deeply familiar in approach. Some reforms are front-loaded with structural benchmarks; others are deferred to the distant end of the program. In the near term, the emphasis remains on revenue extraction, circular debt containment, and tariff rationalizationon — all of which rest heavily on consumer shoulders. Consider the Circular Debt Management Plan. The plan seeks to convert up to 80 percent of the circular debt stock — currently CPPA payment arrears — into new CPPA debt via a sukuk. This financial engineering is expected to significantly lower the interest burden, given sukuk's lower yields. The IMF points out that nearly half of recent circular debt flows have come from interest charges on arrears — and this conversion would ostensibly free up fiscal space, reduce the need for subsidies (a third of which are used for debt clearance), and stabilize the system. But the real story is that consumers are being asked to foot the bill through a fixed debt service surcharge (DSS) of Rs3.23/unit over six years, expected to yield close to Rs2 trillion. For this to succeed, the government must also remove the existing DSS cap by June 2025 — a structural benchmark under the RSF. One might call this reform, but it's more accurately a transfer of inefficiency costs to end-users, while structural fixes to theft, line losses, and governance continue to get lip service, not benchmarks. On petroleum, the front-loaded benchmark is clearer: a Rs5/litre carbon levy on gasoline and diesel, to be legislated under the FY26 Finance Act. This levy is essential to unlock the September RSF tranche and will be gradually phased in. It extends the Petroleum Development Levy (PDL) scope to fuel oil as well — and future finance acts may hike it further. Given the rather aggressive climate financing needs outlined in the report, the IMF has not gone too hard in terms of carbon levies. The forecasted Rs1.3 trillion in lieu of Petroleum Levy revenues for FY26 would not require a substantial increase from existing rates. Part of the additional PDL — Rs10/litre — will finance a limited electricity subsidy of Rs1.7/unit for non-lifeline consumers, running through FY26. Another Rs0.90/unit relief will come from the captive power plant (CPP) transition levy. This brings much-needed clarity on the electricity tariff relief, particularly addressing recent questions around whether the Rs1.7/unit reduction — currently in effect this quarter — is a temporary or permanent measure. The bigger reform narrative — revamping the subsidy architecture — is deferred. The IMF rightly points out that Pakistan's current system is distortionary, often benefiting wealthier consumers and promoting overconsumption. The long-term plan is to eliminate cross-subsidies and replace them with targeted, cash-based subsidies via BISP, starting in FY27. Initial consumer verification is planned by January 2026, followed by eligibility criteria by July 2026, and rebates to be launched by January 2027. This is sound in theory — and if done well, could be transformative. But it is neither prioritized nor benchmarked for the current fiscal cycle. Efficiency, too, gets a nod — in the form of minimum energy performance standards (MEPS) for appliances. By end-June 2027, compliance targets have been set for fans, LEDs, refrigerators, air conditioners, and motors. But again, these goals are tied to the program's final stages and will likely be overshadowed by more immediate revenue-focused reforms. Meanwhile, critical areas like privatization of discos and gencos, resolution of transmission bottlenecks, and addressing systemic theft and losses continue to be acknowledged — but are not attached to performance criteria or disbursement conditions. They remain second-order priorities in the reform matrix. As has often been the case, the more straightforward measures — such as increasing levies and introducing surcharges — are being prioritized and framed as reform. While there has been some movement on addressing the deeper institutional, technical, and governance-related inefficiencies in Pakistan's energy sector, progress remains gradual. Consumers are once again being asked to shoulder more of the burden, even as core structural challenges persist. Whether this round of reforms will deliver more lasting results than previous efforts will ultimately depend, as always, on sustained political commitment.
Express Tribune
15-05-2025
- Business
- Express Tribune
Dasu hydro project to cost a whopping Rs1.74tr
The government on Wednesday conditionally approved the construction of the Dasu hydropower project at a 240% higher cost of Rs1.74 trillion and also decided to build a new border crossing post at Wagah with India. The Executive Committee of the National Economic Council (ECNEC), which took the decisions also approved the construction of 30 anti-smuggling posts along River Indus and in Balochistan at a cost of Rs15 billion. Ecnec took up 10 projects for approval costing Rs2.1 trillion, including the construction of the Dasu hydropower project as an additional agenda item. Deputy Prime Minister Ishaq Dar chaired the executive committee meeting, which has the mandate to approve mega development schemes. Ecnec conditionally approved the revised Dasu project at a record-breaking cost of Rs1.7 trillion or $6.2 billion. Last month, the Planning Minister had termed the cost an "astronomical increase" of 240%. The conditional approval has been given for facilitating loan negotiations with foreign lenders. It was also decided that a helicopter will be procured under the Cabinet Secretary supervision for safe travel of Chinese contractors of the Dasu hydropower project. A Planning Commission's committee would still vet the project cost, according to the officials. Compared to the original cost, there was a massive jump of Rs1.3 trillion in the hydropower project cost with the per-unit cost of the supposedly cheapest water-based power generation scheme now coming to Rs8.79. The original project cost was Rs479 billion. In the Central Development Working Party meeting, Planning Minister Ahsan Iqbal termed had directed third-party validation of the astronomical increase in the revised PC-I. Planning Minister Ahsan Iqbal on Wednesday did not comment on the questions about the approval of the Dasu hydropower project as an additional agenda item and construction of new border crossing with India. The $6.2 billion cost of the project is now almost equal to the $6.7 billion cost of building a railway track from Karachi to Peshawar under the China-Pakistan Economic Corridor (CPEC). The project had been planned to generate 2,160MW of electricity and the government now needs more foreign and local loans. Wapda was in negotiations with the World Bank for a whopping $1 billion new loan. The $1 billion loan will be a mix of expensive and concessional loans. The World Bank has already given a $517 million loan for the project. The government will also get a $400 million foreign commercial loan by using World Bank guarantees. It will also search for Rs350 billion in domestic commercial loans. The government had earlier ordered an inquiry to determine the reason for cost escalation but it did not fix the responsibility on any single entity or individual and pointed figures at Chinese contractors, Wapda and the Planning Commission. The inquiry had also blamed the local administration of Kohistan district for a delay in land acquisition. It said that the cost was increased by Rs48 billion because of enhanced security arrangements after two deadly attacks on the Chinese contractors. The impact of security arrangement was hardly 3.8% in the total cost escalation. The ECNEC approved the construction of a new border crossing at Wagah with India. The government is already implementing a project with the loan of the Development Bank to construct border crossing points along the Afghanistan border. In July last year, the committee had decided that a similar post would also be built at a key crossing point with India, Wagah border. With a cost of Rs95.5 billion, two locations are already being constructed at Torkham and Chaman international borders. The contract for the Wagah post will be given through competitive bidding, according to the decision. Ecnec had asked the planning ministry to give its recommendation whether to build the Wagah border crossing site under the government deal or through international competitive bidding. The committee informed the ECNEC that the lessons learnt from the existing contract, documentary evidence provided by the FBR, comparative analysis on merits and demerits of open and the government-to-government contract, ADB's procurement regulation and Public Procurement Rules, it was advisable to give contract through competitive bidding. Ecnec also approved the construction of 30 anti-smuggling checkpoints along River Indus, Hub and in Balochistan with a cost of nearly Rs15 billion. The Federal Board of Revenue admitted before the ECNEC that the conventional anti-smuggling methods have failed to yield results and the economy was sustaining Rs750 billion revenue losses due to smuggling. The project aims to establish Digital and Mobile Enforcement Stations (DES), along with upgraded check-posts, to curb smuggling, enhance tax revenue, promote formal trade, and strengthen border security through technology-driven enforcement. The scope of work includes the development of 10 DES sites in Balochistan, along with 11 small, 6 mediums, and 3 large DES sites across designated locations. ECNEC approved Sindh Flood Emergency Rehabilitation Project Phase-II at a cost of Rs12.2 billion. The Phase-II envisages restoration and rehabilitation of 146-kilometer long 19-roads in four-districts affected by the floods. ECNEC approved a revised project for repair of 100 locomotives at a cost Rs16 billion. It also sanctioned a project in Khyber Pakhtunkhwa at the revised cost of Rs113 billion for the rural accessibility to markets, education and health facilities, through rehabilitation of the rural road network, measuring 878 km. The Mangi Dam at Rs19 billion revised cost was approved. The main objective of the project is to reduce the existing shortfall in the water demand that is currently being faced by Quetta City. At present, the estimated availability of drinking water in Quetta valley is much less than the minimum 15 gallons per capita per day. Adopting a water consumption of 20 gallons per capita per day, the present water requirement of Quetta is estimated to be 40.9mgd (76.0 cusecs). The proposed Mangi Dam will enable a supply of 8.1 MGD (15.1 cusecs) to Quetta City. ECNEC approved the project namely "Sindh Early Learning Enhancement Through Classroom Transformation" worth Rs46.6 billion. The project is proposed to be financed through the World Bank & Government of Sindh. Project aims to address critical supply-side gaps using a combination of results-based financing and traditional expenditure-based mechanisms to enhance school availability, teacher allocation, and learning outcomes across the province. ECNEC also approved the 220kV Transmission System Network Reinforcement in Islamabad and Burhan Area worth Rs11.3 billion. The main objective of the project is to enhance the capacity of the national transmission system to remove the transmission constraints in order to meet the growing load demand of IESCO and also for reliable dispersal of upcoming generation from Tarbela 5th extension project.
Express Tribune
19-04-2025
- Business
- Express Tribune
Punjab on alert, WASA asked to complete monsoon prep by May 31
Listen to article The Punjab Water and Sanitation Authority (PWSA) has asked all five Water and Sanitation Agencies (WASAs) in the province to complete their monsoon preparations by May 31. During a performance review meeting held on Saturday, PWSA Director General Tayyab Farid stressed the urgent need to clean sewer lines, repair heavy machinery, and set up monsoon camps before the pre-monsoon season begins on June 15, according to a report by APP. 'Revenue recovery is critical to maintaining water and sewerage services,' Farid said, emphasizing that WASAs must also improve their financial performance to keep essential services running smoothly. The meeting was attended by managing directors and officers from all five WASAs. Farid said that in addition to technical preparations, low-lying areas must be identified, and training drills should be conducted with emergency services to prepare for possible flooding. Meanwhile, WASA Rawalpindi Managing Director Muhammad Saleem Ashraf gave a briefing on his agency's progress. He said cleaning of sewer lines was already underway and would be completed before the deadline. He added that WASA Rawalpindi has functional heavy machinery including sucker and jetting machines and dewatering pumps ready to respond to emergencies. The agency has also asked the Punjab Government for funds to clean Leh Nullah and 15 other main drains in the city. Low-lying areas in Rawalpindi have already been identified with the help of the district administration, and trained staff with machinery will be deployed at those points during heavy rains. Saleem also shared that mock exercises will be held in collaboration with Rescue 1122 and other agencies at Leh Nullah and Rawal Dam. WASA Rawalpindi will also set up five monsoon camps across the city that will operate 24/7, and a control room at the head office will monitor the situation and handle complaints. On the revenue side, WASA Rawalpindi recovered Rs1.7 billion last year, exceeding its target of Rs1.57 billion. The target for this year is Rs2.3 billion, and Saleem said he expects to beat that figure as well.
Express Tribune
13-04-2025
- Business
- Express Tribune
The Dasu dilemma
Listen to article Cost-effective power generation has for long been a national desire. But Pakistan, despite having enough hydro resources, has struggled to stay afloat, and per unit cost of electricity for consumers has been exorbitant. Currently, Pakistan has one of the highest energy tariffs in the region, and there is a mixed baggage of wayward decision-making that is to be blamed for it. The rise in the construction cost of Dasu project is a case in point, which has soared to Rs1.7 trillion from Rs479 billion, inflating the price tag of electricity to an estimated Rs9 per unit. It is surely owing to mismanagement, delays and a non-professional approach towards a project of national interest, and is in need of being fixed before it turns out to be another white elephant. The increase of almost 240% in cost cannot be ignored by simply re-approving the project to go ahead. Black sheep and administrative lacunas behind this faux pas must be identified, and ways adopted to ensure that it is productive as and when it is commissioned for power generation. Moreover, the fact that Pakistan's energy mosaic requires more water-storage and power generation dams also needs to be flagged, and a national policy devised out of it. This is indispensable to not only to undo the ripples of IPPs-driven escalated price tags in future, but also to turn self-reliant in energy production. The least that is needed is to depoliticise the prism, and plough out inefficient modules of decision-making that are still in vogue. While the Dasu cost-debacle has been referred to ECNEC for scrutiny, many critical riddles warrant answers: Why were power-generation bodies slumbering when the delay was underway, and why did Wapda not appoint an independent project director and a professional chief finance officer to monitor the project? It is also nerve-wrenching to learn that Wapda had awarded a contract for the construction of a 66km Karakoram Highway section in foreign currency. Such derelictions have pushed the country towards seeking an additional $6 billion funding in these testing times. Will some heads roll is hard to guess!
