Provinces urged to settle Passco dues by December 2025 or face direct deductions at source
Pakistan Agricultural Storage and Services Corporation (Passco) . Photo: file
ISLAMABAD:
The federal government is finalising a plan to deduct the liabilities of provinces at source, which are payable to the Pakistan Agricultural Storage and Services Corporation (Passco).
At present, the government is in the process of winding up Passco and creating a special purpose vehicle (SPV) named Wheat Stock Management Company. Among other matters, the settlement of Passco’s receivables from different agencies, including the receivables from federal and provincial governments, and its liabilities of Rs527.65 billion payable to creditor banks, have been extensively discussed.
It is projected that after adjustments through proceeds from the sale of wheat stocks, the realisation of dues from recipient agencies and the disposal of assets, a residual liability of Rs121 billion will remain to be settled for closing the balance sheet. The SPV will also be dissolved after resolving the pending issues of Passco.
During discussions in a recent meeting of the Economic Coordination Committee (ECC), the Ministry of National Food Security and Research presented the background of its summary and spoke about the proposed establishment of an SPV. It was highlighted that the scheme had been endorsed by the Finance Division, and the SPV would be dissolved once its mandate was fulfilled.
Regarding the liabilities of Passco payable by the provinces, the food security ministry suggested that if provinces did not release the money, deductions may be made at source to facilitate the SPV.
The ECC emphasised that provinces should be asked to settle their liabilities, and if they failed to clear dues by the end of December 2025, the food ministry should send a summary to the ECC in January.
The ministry briefed the forum that Passco, a public limited company incorporated under the Companies Ordinance, 1984 (now Companies Act, 2017), was established with the mandate of procuring wheat for maintaining reserves.
However, following the redefined role of the federal government in wheat procurement, the Prime Minister’s Office, through directives issued on March 31, 2025, called for winding up Passco after stakeholder consultations and advised the establishment of an alternative administrative mechanism for managing strategic wheat reserves. Thereafter, the PM directed the finance minister to lead the process of winding up Passco in consultation with the relevant stakeholders.
In that regard, a committee headed by the finance minister held five meetings in September and October 2025 to deliberate on the modalities for disposing of wheat stocks, settlement of Passco’s liabilities and its eventual closure.
The Ministry of Food Security said that, as the residual amount could not be immediately recovered through budgetary resources, it had been decided that an SPV should be incorporated under Section 16 of the Companies Act, 2017, to raise long-term financing from banks with a sovereign guarantee from the government. The proceeds will be used for the settlement of Passco’s liabilities payable to banks.
The federal government would service the SPV’s debt obligations through annual budgetary allocations over five to seven years, with an amortisation schedule to be agreed upon with the lenders, it said.
In view of the foregoing, the cabinet was requested to consider and approve the proposals submitted to the ECC. It was proposed to establish an SPV titled Wheat Stock Management Company (WSMC) Public Limited under the Companies Act, 2017, with an initial paid-up capital of Rs1 million and an authorised capital of Rs5 billion.
The objective of WSMC shall be to raise long-term financing from banks under the government’s guarantee, with the stipulation that the funds will be utilised to settle Passco’s leftover liabilities.
Authorisation was sought for the food ministry to draft and submit incorporation instruments of the SPV, including its Memorandum and Articles of Association, for vetting by the Law Division.
Approval was also sought for the issuance of a notification in the official gazette, in terms of the Seventh Schedule of the Companies Act, 2017, to prescribe an incorporation fee of Rs10,000 for the proposed SPV, irrespective of the amount of its authorised share capital.
It was proposed that to meet incorporation-related expenditures of the SPV, including the name, reservation fee, filing fee and other statutory charges, and the paid-up capital requirement from budgetary allocations, approval should be granted for re-appropriation within the demand of the food ministry.
It was suggested that WSMC should be exempted from provisions of the State-Owned Enterprises (Governance and Operations) Act, 2023, in terms of Section 5(1)(2) of the Act, read with Clause 4 of the State-Owned Enterprises (Ownership and Management) Policy, 2023, being a special purpose vehicle with no commercial operations.
The ECC considered a summary titled “Winding up of Passco and Establishment of Special Purpose Vehicle (SPV) Wheat Stock Management Company Public Limited” and approved the proposals.
