Today, the Federation of BiH (FBiH) House of Peoples is scheduled to vote on the Law on the Southern Interconnection, which the FBiH House of Representatives passed in December. This is an important moment for Bosnia and Herzegovina (BiH) and for the United States. It is an opportunity to address a pressing national security concern of both countries – BiH’s dependence on Russian gas. We know that Russia uses its energy monopolies to politically and economically blackmail countries, and we have witnessed gas shut offs in BiH. The United States does not want any of its friends and partners in Europe exposed to potential Russian blackmail and that includes Bosnia and Herzegovina. We have been strong advocates of this policy for many years. The delegates to the FBiH House of Peoples have an opportunity today to vote for legislation that moves BiH closer to the transatlantic community of nations and lays the foundation for ending the Russian energy threat to BiH. In today’s geopolitical moment, this is urgent, and it is, or at least it should be, a simple choice: are you a champion of Euro-Atlantic integration, or do you want to side with Russia?
Together, the United States and BiH have worked closely since 2017 on the framework legislation required to allow the Southern Interconnection project to go forward. We have engaged the last Federation government and the current Federation government on this legislation to ensure that it meets international standards, that it is inclusive and meets the interests of all FBiH residents, and that it creates broad-based opportunities for the long-term economic growth and benefits that come from ensuring businesses have access to a secure and reliable source of energy. The decisions taken by BH Gas and announced on January 13 to reform the company are part of this process as well, and they respond directly to the proposals made by several parties in the Federation House of Representatives.
The amendments to BH Gas’s Articles of Association including updates to BH Gas’s management structures, recognizes the FBiH’s constitutional structure by, for example, allowing for the opening of branch offices and creation of project implementation teams in the Federation outside Sarajevo according to the geographical coverage of the Southern Interconnection project. They also support the efficient execution of the Southern Interconnection pipeline and other infrastructure investments. The BH Gas reforms establish the foundation for the company’s expansion without the unnecessary extra costs and inefficiencies associated with the creation of additional companies. The reforms align BH Gas’s organizational structure with similar entities that serve residents in the whole Federation, such as Željeznice FBiH and Autoceste FBiH. And the reforms and reorganization position BH Gas to effectively manage the Southern Interconnection project while optimizing resources.
Unfortunately, there is yet another last-minute attempt to derail the Law on the Southern Interconnection by those seeking to advance their own narrow political and economic interests at the expense of BiH’s energy security. They are arguing that it is possible to implement the Southern Interconnection project through a joint venture with Elektroprivreda Herceg Bosna (EP-HZHB) rather than through BH Gas. This is old wine in a new bottle designed to distract FBiH House of Peoples delegates from the critical and urgent vote they must take today.
There are several legal and regulatory problems with the EP-HZHB proposal. First, EU rules (EU Directive 2009/73/EZ) say that companies that operate electricity or natural gas networks, as EP-HZHB does, cannot simultaneously have a controlling interest in electricity or natural gas supply or generation. In addition, it is EU best practice to have a single Transmission System Operator (TSO) manage a pipeline in a country, especially in a country the size of BiH. Most TSOs in Europe operate much larger networks to reduce duplication and inefficiency. There are technical problems with the EP-HZHB proposal as well. EP-HZHB does not have prior or even relevant experience in the natural gas sector, rather it focuses entirely on renewable energy. Finally, involving multiple companies with differing regulatory environments in the Southern Interconnection project would create unnecessary complexity in governance and administration of the project.
Of course, the point of the unworkable EP-HZHB proposal is not to facilitate the implementation of the Southern Interconnection project. It is to throw sand in the gears of the urgent work that the Federation House of Peoples is slated to do today to lay the foundations for ending the prospects of Russian political and economic blackmail of BiH. It is also designed for the political and economic benefit of one man at the expense of Federation residents – Croats, Bosniaks, Serbs, and Others – as well as to further divide the Federation. The ulterior motives are transparent, and it is a political dead end. No one genuinely committed to BiH’s Euro-Atlantic future, to BiH’s energy security, or to the economic development of the FBiH would embrace, let alone vote, for it. And again, we remind the public that the piece of legislation the Federation House of Peoples will vote on today is the same piece of legislation that had broad political support across all political parties until late 2021. Why? Because they recognized that it is good for the citizens and good for BiH. It should enjoy the same level of support today.
The United States welcomed the Federation House of Representatives adoption of the Law on the Southern Interconnection on December 12, 2024. The United States welcomed the FBiH government’s commitment to the project, including by approving reforms at BH Gas that will improve the company’s operations, ensure the company is representative and inclusive of all FBiH stakeholders, and enhance its ability to implement the Southern Interconnection project. These were important steps toward establishing the legal and operating environment necessary to allow the project to succeed. The next step is for the Federation House of Peoples to adopt the Law on the Southern Interconnection today. Now is the time for BiH’s political leaders to seize its best opportunity to increase the country’s energy security, diversify away from dependence on Russia for gas, and fuel economic growth.
