SEOUL, April 28 (Yonhap) — A special task force of experts on Wednesday advised the government to roll out intensified belt-tightening moves on troubled state-run resource firms, amid growing concerns that their financial health may further deteriorate down the road.

The state-run Korea National Oil Corp. (KNOC) lapsed into complete capital erosion in 2020 as its liabilities exceeded its assets due to continued losses. KNOC’s liabilities stood at 18.64 trillion won (US$16.7 billion) as of the end of last year, up nearly 514 billion won from 2019.

 Korea Resources Corporation, another financially troubled state-run resource firm, also saw its capital base fully eroded last year.

“So far, state-run resource companies have failed to come up with significant improvements in their restructuring efforts due to the COVID-19 pandemic and the decrease in global crude prices,” an independent task force of experts said in a statement.

In order to find a breakthrough, the task force said South Korea should consider merging the troubled firms and establish a new resource company.

The team also said each company should come up with detailed plans to improve their financial health by 2029.