Utility Stores Corporation demands Rs27.6 billion in subsidy claims

ISLAMABAD: Utility Stores Corporation (USC), the country’s biggest state-run retail chain, urged the government to settle Rs27.6 billion worth of its subsidy claims pending for the last seven years, which is creating financial crunch for the company, officials said on Wednesday.

USC, in a letter to the ministry of industries and production, said the government has yet to clear Rs23.25 billion on account of sugar subsidy claims from July 2011 to October 2014 and Rs1.882 billion in prime minister’s relief package from 27 April to 31 December 2016.

“This amount has been accumulated on account of maintaining subsidised prices of 11 items, including black gram, daal channa, daal masoor, mash shelled, masoor whole, white gram, daal mash washed, daal moong washed, sugar, utility ghee and utility oil,” the letter, available with The News, said.

The letter said government released Rs700 million out of Rs1.602 billion allocated for Ramazan package 2017. This is in addition to subsidy claims of Rs1.577 billion pending for the period between January and August 2017, excluding June’s payment.

“Due to non-release of funds to USC, cash flow is badly affected and we are unable to clear the outstanding payments of vendors to the tune of Rs4 billion,” the letter added. “Due to cash flow problem, we are unable to procure further stocks, which are badly affecting sales of USC and leading to loss of government exchequer on account of low payment of taxes,” it said.

USC, which has more than 5,000 outlets across the country, recorded a sharp decline in sales to less than Rs1.5 billion a month from Rs7.5 billion previously.

“Mismanagement and embezzlements for the last several years have also been a catalyst to decrease in sales to the lowest ebb, ultimately causing losses,” a senior official said, requesting anonymity.

Sources in the corporation said various internal reports unearthed hundreds of millions of rupees in misappropriation allegedly committed by some officials. The irregularities were found mainly in the procurement of commodities and sales.

Another official of the corporation said internal audit reports even mentioned the names of officials who were found guilty for involvement in embezzlements, “but they are still holding their offices”. “Some of them have been nominated in NAB (National Accountability Bureau) cases,” he added. “One of the senior officials who were nominated in NAB cases got retired.”

USC turned into red in the past four years. The company recorded Rs94 billion in sales with Rs1.4 billion of profit in 2012/13. The following year, it incurred Rs20 million in losses with sales recorded at Rs87.3 billion.

In 2014/15, sales further dropped to Rs59 billion with losses of Rs2.2 billion. Sales amounted to Rs50.37 billion with losses of Rs3.07 billion in 2015/16. USC earned revenue of Rs59 billion with losses of Rs3.85 billion in the past fiscal year.

USC sources said the outlets run short of essentials, such as oil/ghee and sugar. The inventory is available in Islamabad Capital Territory, but not anywhere else where it is mostly required.

Officials said the corporation stopped selling ghee/oil sales after a complaint filed in the Supreme Court against substandard and adulterated cooking oil at its outlets. The court, however, disposed off the case after the sale was stopped.

Officials said the corporation should take action against those who were involved in procurement of substandard products.