By Yi Whan-woo
Speculation is circulating that former President Lee Myung-bak’s controversial overseas energy initiative means that the state-run Korea National Oil Corporation (KNOC) will be unlikely to retrieve the amount it invested under the policy.
The debt-ridden KNOC was at the center of Lee’s broad drive to secure energy supplies for resource-deficient Korea. The main cause of the losses incurred by KNOC was attributed to an investment made to buy Canadian oil producer Harvest Operation Corps in 2009.
According to the main opposition New Politics Alliance for Democracy (NPAD), Monday, KNOC spent some 5.4 trillion won ($4.97 billion) on acquiring the Canadian company.
This amount includes a 1.1 trillion won-debt owed by Harvest Operation Corps, said the NPAD.
It added that KNOC, which sold s 100 percent stake of the Canadian firm in September, is not likely to retrieve the amount it invested.
It cited that KNOC reported cumulative losses of 1.17 trillion won as of last year, after it purchased the Canadian developer in 2009 for 3.84 trillion won ($3.64 billion).
Among public organizations, KNOC took the brunt of criticism due to its blind investments and snowballing debts.
The NPAD called for parliamentary support to look into Lee’s investments in overseas energy that ended up in lower-than-expected profits or losses.
“We have been receiving convincing and concrete evidence since we announced plans to probe the matter thoroughly,” said NPAD floor leader Rep. Woo Yoon-keun. He referred to the party’s announcement to form an investigation committee to look into reasons behind Lee’s botched efforts. “We urge the ruling Saenuri Party to take a part together in investigation.”
The NPAD previously targeted KNOC at the three-week long National Assembly audit in October.
The annual audit focused on evaluating the administrative performance of ministers as well as the management of state-run companies.
At that time, the party also said the lawmakers should look into any links between the current government and Lee's investments and stressed that President Park Geun-hye’s chief economic policymaker, Choi Kyoung-hwan, played a key role in implementing the disputed overseas energy initiatives for the previous government.
Choi is currently the deputy minister and also the minister of strategy and finance. He served as Lee’s commerce minister from 2009 to 2011. The party claimed that the main cause of the KNOC's losses is an investment made to acquire Canadian oil producer Harvest Operation Corps in 2009.
In 2008, Lee launched a foreign energy development project, in which the government invested 19 trillion won for five years in order to have the amount of the country’s petroleum produced overseas increased to 300,000 barrels annually from 50,000.
However, a number of state-run energy companies have become debt-ridden since then because they went on an excessive buying-spree of overseas assets without conducting thorough studies.
The 12 heavily-indebted companies, categorized by the government last year, include several energy firms such as KNOC, Korea Electric Power Corporation (KEPCO) and Korea Gas Cooperation. They were asked to reduce their debt ratio to 200 percent by 2017.