The Norwegian government has officially decided to set up a new unit for the investment of some of its huge national wealth in the Arctic town of Tromsø, which will be managed by Folketrygdfondet and eventually given NOK30bn (€2.64bn) to invest.

The plan, which was proposed in the government’s annual white paper on the sovereign wealth fund (SWF) in April 2022 as a way of expanding the state presence in the Northern region, has now been set out in draft legislation which the Finance Ministry has distributed for consultation.

It said yesterday: “The ministry proposes that Folketrygdfondet, the company under special state legislation which manages the Government Pension Fund Norway [GPFN] and the Government Bond Fund, should establish an office in Tromsø where the government fund will be managed.”

“It is planned that the fund will be established with a limit of NOK15bn, which can be increased to NOK30bn once some experience has been gained,” the ministry said.

The management mandate would be determined by the ministry after the Storting, Norway’s parliament, had made a decision on financing, it said.

The consultation is set to run until 5 February next year.

Kjetil Houg, chief executive officer of Folketrygdfondet, said today: “It is a declaration of confidence in Folketrygdfondet as an organisation that the government wants to give us the task of managing a new fund from Tromsø.”

“Our ambition is to meet the task of establishing the fund in a way that will be efficient, while at the same time producing positive effects for the whole organisation,” he said.

The Oslo-based institution said the proposal was in line with the recommendation it sent to the ministry on 15 September.

The ministry said it was proposing that the Arctic fund be invested on market terms with the aim of achieving the highest possible return over time at an acceptable level of risk, adding that it also had to be managed responsibly.

The vast majority of Norway’s sovereign wealth – based on oil revenues – is managed down south in the capital city of Oslo via the GPFN and the much larger Government Pension Fund Global, which together hold NOK16.2trn.

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