Norway has passed a law to ensure state control of hydro power resources by preventing sales to the private sector and limiting such players to one-third ownership of publicly-held assets in future.

According to the Ministry of Petroleum and Energy, the legislation – effective immediately – is to help ensure stability in the power sector by avoiding speculation. It added that the legislation was vital to help protect public ownership of strategic resources.

Government departments are studying the detailed consequences of the law before its move from provisional to permanent status is approved.

The Ministry said that the decree resolved a legal difference with the European Free Trade Area (EFTA). In late June, the EFTA Court ruled that the Norwegian practice of the right of reversion was in conflict with the European Economic Area agreement.

In a statement, the Ministry added: ‘The right of reversion is a major and crucial issue for the government and for Norway.’

The provisional decree, approved by the King’s Council, will ensure compatibility between Norwegian law and the EEA agreement, the Ministry said.