Good Money After Bad
The Board of Audit & Inspection announced on July 14 that the Korean government has invested 35.8 trillion won (US$31.3 billion) in 169 natural resources development projects abroad since 1984, but this investment has been inefficient, resulting in losses of 12.8603 trillion won (US$11.2466 billion).
According to its data, the Korea National Oil Corporation (KNOC) invested 21.7 trillion won (US$19.0 billion) in 97 projects during the period, and the figures amounted to 10.3 trillion won (US$9.01 billion) in 25 projects for the Korea Gas Corporation (KOGAS), and 3.8 trillion won (US$3.3 billion) in 47 projects for the Korea Resources Corporation (KORES), respectively.
However, the procurement of oil from abroad was limited to 2.24 million barrels, equivalent to just 0.2 percent of Korea’s annual petroleum imports. “The KNOC invested 5.7 trillion won [US$5.0 billion], 29.3 percent of its total investment, in 10 non-viable projects,” the Board of Audit & Inspection explained, adding, “Fortunately though, the procurement of minerals and gas from abroad each reached 31.5 percent and 66.5 percent of the total equity outputs, which, in fact, are insufficient.”
It also pointed out that the corporations concentrated on quantitative expansion based on share acquisition and the like instead of looking carefully into the feasibility of the projects. “With the situation as it is, these corporations are planning to pour an extra 46.6 trillion won [US$40.8 billion] into 48 projects, which could lead to a financial crisis in the worst-case scenario,” it remarked, continuing, “Then, the debt ratios of the KNOC and KOGAS are estimated to soar each from 278 percent to 320 percent and from 244 percent to 277 percent, while that of the KORES skyrockets from 134 percent to 692 percent.”