What does it mean that collective protection does not form the basis for permanent residence?

With a permanent residence permit or permanent right of residence, you can reside and work in Norway indefinitely. Collective protection is a permit that does not form the basis for permanent residence. You can therefore not apply for permanent residence after three years. 

If UDI decides that you still need protection after three years, you can get a new temporary permit. UDI will assess the application on an individual basis. If you receive a new permit after three years of collective protection, the new permit will provide a basis for you to later apply for a permanent residence permit.