Pakistan to close national chain of subsidized retail stores amid privatization push

In this file photo, taken on March 16, 2024, people stand in que outside at the Utility Store retail outlet in Multan. (APP/File)
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Updated 16 July 2025
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Pakistan to close national chain of subsidized retail stores amid privatization push

  • Government pushes ahead with shut down of decades-old Utility Stores Corporation by end of July
  • Voluntary Separation Scheme under discussion as committee reviews financial and legal implications

ISLAMABAD: Pakistan will shut down the state-owned Utility Stores Corporation (USC) by July 31 as part of a broader government effort to restructure and privatize loss-making public sector entities, according to a statement from the finance ministry carried by state broadcaster Radio Pakistan on Wednesday.

The decision follows years of declining performance, mismanagement allegations, and heavy financial losses at the USC, a nationwide retail chain originally established in 1971 to provide essential commodities at subsidized prices to low-income households. The stores were once a key instrument in the government’s food security and price control policies but have faced mounting criticism over inefficiency, politicized staffing and weak oversight.

A high-level committee formed by Prime Minister Shehbaz Sharif to oversee the closure and privatization of the USC met on Wednesday in Islamabad, with Finance Minister Muhammad Aurangzeb chairing the session.

The committee is responsible for ensuring a transparent shutdown process, designing a fair Voluntary Separation Scheme (VSS) for USC employees and recommending a timeline for privatization or asset disposal.

“All operations of Utility Stores Corporation will be closed by 31st of this month in accordance with the government's directives,” the Radio Pakistan report said.

The committee “discussed at length the formulation of a fair and financially viable Voluntary Separation Scheme for the Utility Stores employees” and examined various aspects including its potential size, fiscal impact, and legal implications.

To support the analysis, a sub-committee led by the secretary of the Establishment Division has been formed and will submit recommendations on the structure and feasibility of the VSS by the end of the week.

The committee also advised that the government’s Privatization Commission be consulted on whether the USC's assets should be sold off or restructured for privatization.

The closure of the USC marks a significant step in Pakistan’s ongoing efforts to reduce the burden of state-owned enterprises on the national budget in line with reforms encouraged by the International Monetary Fund. Over the years, several audits and parliamentary reviews have pointed to chronic inefficiencies at the USC, including procurement irregularities and an inability to meet its mandate effectively in remote and underserved areas.


Islamabad puts drivers on notice as smog crisis worsens

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Islamabad puts drivers on notice as smog crisis worsens

  • Police checkpoints have issued over 300 fines and impounded 80 vehicles as Islamabad rolls out roadside emissions checks
  • Transport accounts for over half of the capital’s toxic PM2.5, with air quality this month repeatedly breaching WHO safety limits

ISLAMABAD: Truck driver Muhammad Afzal was not expecting to be stopped by police, let alone fined, as he drove into Islamabad this week because of the thick diesel fumes emanating from his exhaust pipe.

“This is unfair,” he said after being told to pay 1,000 rupees ($3.60), with the threat of having his truck impounded if he did not “fix” the problem.

“I was coming from Lahore after getting my vehicle repaired. They pressed the accelerator to make it release smoke. It’s an injustice,” he told AFP.

This picture taken on December 10, 2025, shows residents examining their cars at an emission testing point in Islamabad. (AFP)

Checkpoints set up this month are part of a crackdown by authorities to combat the city’s soaring smog levels, with winter months the worst due to atmospheric inversions that trap pollutants at ground level.

“We have already warned the owners of stern action, and we will stop their entry into the city if they don’t comply with the orders,” said Dr. Zaigham Abbas of Pakistan’s Environmental Protection Agency (EPA), as he surveyed the checkpoint at the southeast edge of the capital.

For Waleed Ahmed, a technician inspecting the vehicles at the site, “just like a human being, a vehicle has a life cycle. Those that cross it release smoke that is dangerous to human health.”

This picture taken on December 10, 2025, shows technician Waleed Ahmed examining a vehicle to test its emissions on road, on the outskirts of Islamabad. (AFP)

‘SELF-INFLICTED CRISIS’

While not yet at the extreme winter levels of Lahore or the megacity Karachi, where heavy industry and brick kilns spew tons of pollutants each year, Islamabad is steadily closing the gap.

So far in December it has already registered seven “very unhealthy” days for PM2.5 particulates of more than 150 micrograms per cubic meter, according to the Swiss-based monitoring firm IQAir.

Intraday PM2.5 levels in Islamabad often exceed those in Karachi and Lahore, and in 2024 the city’s average PM2.5 reading for the year was 52.3 micrograms — surpassing the 46.2 for Lahore.

Those annual readings are far beyond the safe level of five micrograms recommended by the World Health Organization.

An aerial picture shows dense smog in Islamabad on December 12, 2025. (AFP)

Built from scratch as Pakistan’s capital in the 1960s, the city was envisioned as an urban model for the rapidly growing nation, with wide avenues and ample green spaces abutting the Himalayan foothills.

But the expansive layout discourages walking and public transport remains limited, meaning cars — mostly older models — are essential for residents to get around.

“The capital region is choked overwhelmingly by its transport sector,” which produces 53 percent of its toxic PM2.5 particles, the Pakistan Air Quality Initiative, a research group, said in a recent report.

“The haze over Islamabad... is not the smoke of industry, but the exhaust of a million private journeys — a self-inflicted crisis,” it said.

‘HER BASIC RIGHT’

Announcing the crackdown on December 7, EPA chief Nazia Zaib Ali said over 300 fines were issued at checkpoints in the first week, with 80 vehicles impounded.

“We cannot allow non-compliant vehicles at any cost to poison the city’s air and endanger public health,” she said in a statement.

This picture taken on December 10, 2025, shows a technician pasting a certified sticker on a car after it cleared an emission test in Islamabad. (AFP)

The city has also begun setting up stations where drivers can have their emissions inspected, with those passing receiving a green sticker on their windshield.

“We were worried for Lahore, but now it’s Islamabad. And that’s all because of vehicles emitting pollution,” said Iftikhar Sarwar, 51, as he had his car checked on a busy road near an Islamabad park.

“I never needed medicine before but now I get allergies if I don’t take a tablet in the morning. The same is happening with my family,” he added.

Other residents say they worry the government’s measures will not be enough to counter the worsening winter smog.

“This is not the Islamabad I came to 20 years ago,” said Sulaman Ijaz, an anthropologist.

“I feel uneasy when I think about what I will say if my daughter asks for clean air — that is her basic right.”