Govt moves to replace PASSCO with Wheat Stocks Management Company with Rs350bn authorised capital

The federal government has decided to create a new Wheat Stocks Management Company (WSMC) Public Ltd, with an authorised capital of Rs350 billion, to replace the Pakistan Agricultural Storage and Services Corporation (PASSCO) as part of a broader restructuring of federal wheat operations, Business Recorder reported, citing official sources.

Under the approved plan, the Ministry of National Food Security and Research (MNFSR) will submit incorporation documents for vetting by the Law Division. The WSMC will begin with a paid-up capital of Rs1 million, with an incorporation fee capped at Rs10,000 as a wholly government-owned entity. 

The secretaries of fo MNFSR and the Finance Division, along with the Additional Secretary-I of MNFSR, will act as initial subscribers to the Memorandum of Association. The Joint Secretary of MNFSR will serve as the interim CEO until the board appoints a regular head.

The decision follows directives issued by the Prime Minister’s Office in September 2024 and March 2025 to wind up PASSCO and design an alternative structure for maintaining strategic wheat reserves. PASSCO, incorporated under the Companies Ordinance of 1984, was originally mandated to procure wheat for national stocks.

Earlier, a committee led by the finance minister held five rounds of meetings between September 2 and October 10 this year to determine the disposal of wheat stocks, settlement of receivables and liabilities, and the framework for PASSCO’s closure. Receivables from federal and provincial agencies and outstanding liabilities to creditors, totalling Rs527.66 billion, were reviewed in detail.

After adjusting wheat sales, recoveries from provincial and federal recipients, and disposal of assets, the government expects a residual liability of around Rs121 billion that must be cleared before PASSCO can be wound up.

Officials told the ECC on November 18 that this remaining amount cannot be met immediately through budgetary resources. It has therefore been decided that a Special Purpose Vehicle will be incorporated to raise long-term bank financing under a federal sovereign guarantee. The ECC approved the proposal, allowing WSMC to borrow and settle PASSCO’s remaining debts.

The federal government will service the SPV’s loans over five to seven years, aligned with lenders’ amortisation schedules. The ECC has also endorsed exemptions for the new SPV from provisions of the State-Owned Enterprises Act, given that it will carry no commercial operations and will dissolve through self-liquidation once its mandate is completed.

The ECC’s approval is now pending federal cabinet ratification, after which the formal winding-up of PASSCO will begin.