Bosnia and Herzegovina (BiH) and Croatia are on the verge of finalizing an interstate agreement that will facilitate the construction of the Southern Gas Interconnection. The signing of this agreement is anticipated within the next two to three months, representing a crucial step towards connecting the gas infrastructure of both nations through a new pipeline that will extend from Posušje in BiH to Croatia’s existing gas network.
The formal agreement is expected to be executed in April in Dubrovnik, involving representatives from both the Bosnian Council of Ministers and the Croatian government. This project has a completion deadline set for the end of 2027, largely influenced by the European Union’s impending ban on Russian fossil fuel imports. Currently, Bosnia and Herzegovina is heavily reliant on Russian gas supplies, making this interconnection vital for its energy security.
In tandem with this development, amendments to existing legislation regarding the Southern Gas Interconnection are currently being prepared. These amendments follow a previous law passed by the Federation Parliament that designated Sarajevo-based BH Gas as the project implementer—a decision met with opposition from HDZ BiH. Following mediation efforts by the US Embassy, a compromise was reached that now assigns project oversight to a private US company, effectively diminishing local political control over the initiative.
The Southern Gas Interconnection will be developed under a concession model, aligning with current legislative frameworks in the Federation of Bosnia and Herzegovina (FBiH). To bolster financial viability for this project, authorities are also exploring plans to construct three gas-fired power plants. This strategy aims to mitigate potential costs associated with pipeline operations that could otherwise burden households given limited demand for gas. Among these plans are proposals for a new plant in Mostar and the conversion of existing coal-fired facilities in Kakanj and Tuzla, targeting an aggregate installed capacity of approximately 1,200 MW. Notably, US firms AAFS Infrastructure and Energy along with Bechtel have shown direct interest in these energy projects.
