Croatia has not yet agreed to the draft text: Signing of the South Interconnection Agreement is questionable, only a non-binding declaration is possible in Dubrovnik

(Patria) - The signing of the intergovernmental agreement between Bosnia and Herzegovina and Croatia on the South Gas Interconnection is jeopardized, Istraga.ba has learned. Instead, on Tuesday in Dubrovnik, as an alternative, only a "joint declaration of intent to support the South Interconnection" could be signed. However, this declaration is not a binding Agreement that is necessary to sign in order to realize the South Interconnection project. 

A joint declaration of intent to support the South Interconnection should be signed by officials from Bosnia and Herzegovina, the USA, and the Republic of Croatia. This declaration would "support the expansion of cross-border energy infrastructure". There is a possibility that a Memorandum of Understanding could also be added, but this is also a non-binding act.

Because the Memorandum and the joint declaration, in effect, mean nothing more than "expressing good intentions". For the realization of the South Interconnection project, it is necessary to sign an intergovernmental Agreement. However, according to Istraga's information, the Government of the Republic of Croatia has been under pressure from Brussels in recent days, i.e., the EU, which is not satisfied with the solutions for the South Interconnection and which, in their opinion, are contrary to European energy regulations.

We remind you that in mid-April, the Parliament of the Federation of Bosnia and Herzegovina amended the Law on the South Gas Interconnection. With these amendments, the American company AAFS, backed by Joseph Flynn, the brother of Milorad Dodik's lobbyist, was designated as the project holder for the South Gas Interconnection. This company is designated as the investor in the law, while BH Gas was excluded from the construction provisions.

For this project to be realized, it is necessary for Bosnia and Herzegovina to sign an Agreement with the Republic of Croatia. The Presidency of Bosnia and Herzegovina, at an urgent telephone session on Wednesday evening last week, made a decision to form a working group for negotiations with the Republic of Croatia. The head of the BiH delegation was supposed to be the Minister of Foreign Trade and Economic Relations of Bosnia and Herzegovina, Staša Košarac (SNSD). However, he transferred his authority to his deputy, Ljiljana Lovrić (HDZ), to conduct negotiations with the Republic of Croatia, and for the Council of Ministers of Bosnia and Herzegovina to approve the agreement on Friday, so that the Presidency of Bosnia and Herzegovina would finally approve it on Monday. The signing of the Agreement was supposed to take place on Tuesday in Dubrovnik, with the presence of the US Secretary of Energy, Chris Wright.

"Issues related to decision-making on joint implementation and related investments will be regulated by a separate Agreement on joint project development between the investment holders referred to in Article 6 of this Agreement," the draft Agreement states.

It further states that "the contracting parties will ensure the harmonization of all details regarding the design, preparation, and execution of all works on the construction of the interconnection, and will also agree on the harmonization of the dynamics of all procedures for obtaining the necessary approvals and permits from the competent authorities of Bosnia and Herzegovina and the Republic of Croatia, as well as procedures in the construction and commissioning of the gas pipeline. (...) Inspection supervision during the construction of the interconnection will be carried out in accordance with the positive legal regulations in this area applicable in Bosnia and Herzegovina and the Republic of Croatia. The contracting parties have agreed that the construction of the interconnection and expert supervision/supervision of construction will be carried out in all respects in accordance with national or international rules in the field of procurement and/or according to the rules of financial institutions, depending on the financing method that will be defined in a timely manner. Each contracting party will ensure the preparation, financing, and construction of the gas pipeline section on its own state territory in accordance with its laws and other regulations.".

The competent authorities for the implementation of this agreement will be the Ministry of Foreign Trade and Economic Relations of Bosnia and Herzegovina and the Ministry of Economy of the Republic of Croatia. The Government of the Federation of Bosnia and Herzegovina will be responsible for all aspects related to the realization of the project in Bosnia and Herzegovina.

"The Government of the Federation of Bosnia and Herzegovina has the authority to implement the project according to the model it chooses, including through the granting of concessions in accordance with the legislation of the Federation of Bosnia and Herzegovina. The investment holder is the company AAFS Infrastructure and Energy d.o.o. based in Sarajevo. The Government of the Republic of Croatia will be responsible for the realization of the project on the territory of the Republic of Croatia in accordance with the legislation of the Republic of Croatia. The investment holder is the company Plinacro d.o.o. based in Zagreb," the "updated" draft states.

This draft was sent to the Council of Ministers, which requested the Presidency of Bosnia and Herzegovina to initiate negotiations with Croatia. The Presidency of Bosnia and Herzegovina made a decision to initiate negotiations last week. Officials from the US Embassy in Sarajevo, as we have learned, asked the BiH authorities to complete the negotiations with Croatia last Friday so that the Council of Ministers of BiH would determine the text of the Agreement on the same day, which would then be sent to the Presidency of BiH. Finally, the Presidency of BiH would make a decision on it on Monday.

However, none of these steps were followed because Croatia, due to pressure from Brussels, did not agree to the text of the Agreement. Therefore, BiH institutions could not determine the text of the Agreement that would be signed on Tuesday. Croatia, therefore, is now insisting on signing a joint declaration and a Memorandum of Understanding, which is contrary to the demands of the USA, whose minister Chris Wright is coming to Dubrovnik to witness the signing of the Agreement.

During the week, representatives of the American company tried, at a meeting with Andrej Plenković, to lobby the authorities of the Republic of Croatia to give their consent to the text of the Agreement. However, the positions from Brussels are, for now, more important for official Zagreb.