|OSLO - Norway took a step towards opening its hydropower industry to private and foreign investors on Tuesday when officials suggested reforms of century-old rules favouring public ownership of hydroelectric concessions.|
Norway is highly dependent on hydropower, with hydroelectric stations accounting for about 99 percent of domestic power production and about 93 percent of consumption this year.
The measures designed to satisfy European demands for fair treatment of owners were outlined in a report by a 12-member committee to the government and have not yet become policy. Some industry officials said the political fight has only now begun.
Most committee members backed a system where concessions would run for 75 years from when the new law is passed, and concession holders would keep a one-third interest once the concession reverts to the state at the end of the term.
That would mean fixing a concession period for all licence-holders, instead of the current system where public owners enjoy concessions in perpetuity while private and foreign buyers get fixed-length concessions.
But the committee was split, with some saying concessions should last 60 years, some advocating compensation of only 20 percent of the value of an asset that reverts to the state and others saying concession holders should keep 45 percent.
The committee handed its report on Tuesday to Oil and Energy Minister Thorhild Widvey, who declined to give any indication of the kind of proposal the government would support. A bill could be sent to parliament next spring at the earliest.
The suggested reforms stem from non-EU member Norway's obligations under the European Economic Area (EEA) treaty to level the playing field for public and private, Norwegian and foreign investors.
The rules now governing power concessions to private owners dates from 1909 legislation, which has effectively kept hydropower resources in public hands.
The state now owns about half and municipalities about 40 percent of the Norwegian hydropower industry. Industrial groups Norsk Hydro and Elkem are the main owners of the 10 percent in private hands.
Under the current rules, concessions sold to foreign or private investors expire 60 years after the licence was granted. A concession given in 1950 would revert to the state in 2010, and therefore have no attraction to today's private buyers.
A majority of the committee, comprising officials from ministries, municipalities and industrial federations, said current private concession holders should get a new concession from the time the new law is passed equal to that for public owners.
Some analysts have said that reforming the concession legislation will open the flood gates to power plant sales by municipalities strapped for cash.
Control of hydropower assets is a topic of heated political debate in Norway, where some politicians say it is an integral part of the Nordic welfare model and must be kept in public hands.
"It is going to be a big fight," said Kristian Pladsen, spokesman for the Norwegian Electricity Industry Association. He said the committee's report was "not what we have dreamt of, but it is pretty good."
Committee chairman Tore Vestbakke told a news conference it had not been part of the committee's mandate to assess the willingness of power plant owners to sell.
Story by John Acher
REUTERS NEWS SERVICE