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Red Justice

Oil together now: Lessons on nationalisation from Norway

As South Africa wrestles with the idea of nationalising its mines, the small European country of Norway could serve as a good example that, when managed correctly, nationalising a country's wealth can be a good idea.

The oil-rich country nationalised this natural resource in 1972, two years after foreign companies started exploring oil off Norway's coast.

With the money made from oil sales invested in more than 8 600 listed companies across the world, Norway created a wide net of social welfare services that provide free education, healthcare and pensions to all the country's citizens.

Statoil, Norway's state-owned oil company was established with a principle of 50% state participation in each licence issued. The state is now the majority shareholder, with a 67% stake in Statoil. The Norwegian government's ownership of oil has been reviewed over the years and is currently divided between its Statoil concerns, and the state's direct financial interest (SDFI), an arrangement in which the government owns interests in a number of oil and gas fields, pipelines and onshore facilities.

It is not clear yet what form of nationalisation or state participation in key economic sectors will eventually triumph in South Africa. The ruling ANC is still investigating the viability of nationalisation and best practice by conducting case studies in 13 countries.

Norway is one of the countries identified for the case studies.

Mines are on top of the list of industries that the ANC Youth League says should be nationalised.

ANC president Jacob Zuma was on a state visit to Norway last week in his capacity as South Africa's president, to strengthen trade relations and forge partnerships across several sectors with the European country.

Economic boon
The Norwegian oil fund, invested under the state's Government Pension Fund is now valued at $562-billion.

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