Norway's Opposition Wants Wealth Fund to Invest in Infrastructure

Norway's $870-billion sovereign wealth fund should be allowed to directly invest in infrastructure such as wind farms and solar plants, the country's opposition Labour party will propose, a plan gaining the support of the majority of parties.

The world's largest sovereign wealth fund, which owns on average 1.3 percent of all listed companies worldwide, is currently mandated to invest in stocks, bonds and property abroad.

But if the fund, set up to invest Norway's oil and gas revenue, was allowed to expand the scope of its portfolio to include infrastructure projects, starting with renewables, it may greatly increase capital into the sector.

If one percent of the fund went to the green sector, it would mean $8.7 billion in available funding at current values.

Labour, the largest party in parliament, said it would propose a motion early next year calling on the fund to be allowed to invest in infrastructure, starting with renewable energy projects.

"The aim is to expand the fund's investment universe," Torstein Tvedt Solberg, Labour's spokesman for the oil fund and a member of Parliament's finance committee, told Reuters. "There is a need for capital for renewable energy projects, such as solar farms and wind farms."

Solberg did not name projects, but there are candidates worldwide, including the Desertec Industrial Initiative, a German industrial group that aims to import to Europe solar and wind power from deserts, which saw two of its backers quit earlier this year. .

The fund can invest in infrastructure projects by buying stocks or bonds of the governments or companies that run them. But it cannot become a joint owner in an unlisted company, unless the firm plans to float.

Labour's proposal would also push for better oversight of the fund's investments.

"Companies are not so open when they are not listed on the stock exchange. We must find a way to safeguard openness," Solberg said.

The fund declined to comment.

Majority Support
Labour stands a good chance of passing the motion, as the majority of parties, including the Christian Democrats, the Centre Party, the Socialist Left and the Greens, told Reuters it would either back it or would be open to discuss it at least.

"This goes in the same direction as our own thinking," the leader of the agrarian Centre Party, Trygve Slagsvold Vedum, said in an interview.

Crucially, the proposal may receive the backing of the Christian Democrats, upon whom the minority government of Prime Minister Erna Solberg relies on to stay in power.

The party has its own proposal, calling on the fund to invest more in the "poorest countries". The fund already invests in several developing nations.

"There could be joint work on these two proposals, so this could be very exciting," said Hans Olav Syversen, the Christian Democrat's finance spokesman and the leader of Parliament's finance committee.

Less certain is whether the plan would be supported by the Solberg government's other ally, the Liberals, a centrist party with an environmental profile.

The party's finance spokesman told Reuters he would not discuss the motion until he read it. Without the Liberals' support, Labour's proposal would be short of the two votes needed to win a majority.

Much will depend on how the government will react. Earlier this year Labour called for the fund to pull out of coal companies, which had the backing of a majority in parliament.

But the government blocked the motion by appointing a commission investigating whether the fund should pull out of coal, oil and gas companies. It is due to present its findings by late November.

Labour will also want the backing of the ruling Conservatives and Progress Party, to avoid the fund seeing its mandate changed back and forth in years to come. Politics in Norway tend to be more consensual than in other European countries.

The finance ministry said it could not comment on a proposal that had not yet been submitted, but added it had decided against it in 2011.

"The reasons for this included increased management costs, the significant uncertainty associated with expected risk-adjusted returns, and the need to first gather experience based on the fund's investments in real estate," deputy finance minister Paal Bjoernestad told Reuters.

"At the same time it was pointed out that the fund's long investment horizon makes it natural to return to the question of such investments later."

(By Gwladys Fouche and Joachim Dagenborg, Additional reporting by Nina Chestney in London, editing by Louise Heavens)