Why the state is an owner

The Government believes that private ownership should be the main rule in Norwegian business and industry. The state should only have ownership interests in companies when this is the best means of meeting the state’s needs.

Oil platform
Credit: Petoro, Øyvind Hagen

The companies with a state ownership interest can roughly be divided into three groups based on how the state came to own them: Business activities initiated by the state, existing businesses that were taken over by the state and the production of goods and services by state-owned undertakings.

The rationale for state ownership in companies today can be divided into two groups. The first group comprises companies that primarily operate in competition with others. The rationale for state ownership in these companies includes the positive spillover effects of maintaining head office functions in Norway, civil protection and emergency preparedness, a failure in parts of the capital market, and ownership of natural resources. The second group comprises rationale to organise state tasks through a company. Such rationale include giving a business greater operational autonomy or professional independence. These companies do not primarily operate in competition with others, and the alternative to state ownership is often to organise the business as a government agency.

The Government uses state ownership when this is an expedient measure.

Even though there is a valid rationale in many cases for the state owning companies, state ownership entails certain challenges, for example potential conflicts between the state’s different roles, intensified principal-agent problems, a weaker foundation for exercising value-creating ownership and an undesirable concentration of power. The state’s ownership policy, as set out in the white paper on ownership policy, aims to reduce such challenges and to contribute to the best possible goal attainment in the individual companies.