By Kang Seung-woo
The government invested nearly 36 trillion won in overseas resource development projects over the past 30 years, but most of them failed, the state auditor said Tuesday.
Under existing contracts, the country is set to spend some 46 trillion won more in the future.
The Board of Audit and Inspection of Korea (BAI) revealed interim findings of its evaluation of the resource projects.
“Since 1984, government offices have spent 35.8 trillion won on 169 projects to secure resources overseas. But their performances were unsatisfactory,” the BAI said.
The audit agency added that the Korea National Oil Corp. (KNOC) spent 21.7 trillion won on 97 projects, followed by Korea Gas Corp. (KOGAS) and Korea Resources Corp. (KORES), which invested 10.3 trillion won in 25 businesses and 3.8 trillion won in 47, respectively.
“We wonder why the government has launched overseas projects,” Jeong Gil-young, a senior BAI auditor, told a press briefing.
As for developing oil attainment, the KNOC has secured only 0.2 percent of the total annual amount of imported oil in the past 13 years.
In addition, 40 projects, which need future investment, suffered a deficit of 12.8 trillion won between 2008 and 2014, along with an estimated loss of 14.5 trillion won over the next five years.
The BAI said that the additional investment for 48 overseas projects may lead the state-run companies into a financial crisis, as the agency estimates that seven businesses, which need 6.7 trillion won after already using 66 million won, are not likely to recover their investment costs.
In addition, the state-run firms whitewashed risk factors from their projects, and the absence of internal control systems resulted in huge losses, the BAI said.
The BAI’s inspection, which started in March, covers government bodies and state-run firms, including the Ministry of Strategy and Finance; the Ministry of Trade, Industry and Energy; and firms that led overseas energy projects under the former Lee Myung-bak administration.
The focus of the inspection was put on assessing the performance of energy deals under the Lee administration, as well as how loss-making deals could be restructured rather than the irregularities committed, according to the state agency.