New test for the FBiH Government and the "Trojka": HDZ proposed the Law on Southern Interconnection, transferring the project to private companies

By Almir Bečarević

When HDZ expresses a desire to regulate the gas sector as they see fit, they resort to cunning, operating from the premise that almost everyone, especially Bosniaks, is naive. The humiliation faced by the representatives of the "Trojka" in the FBiH Government through the daily demands of the HDZ, which they must fulfill, is now culminating in obligations concerning laws they must deliver to this political entity.

The HDZ has submitted a plagiarized Law on the "Southern Interconnection Bosnia and Herzegovina and the Republic of Croatia" gas pipeline to the FBiH Government for adoption. When you take someone else's work and copy "three tons" of it, it's called plagiarism, and that's exactly what this proposed law is about.

The submitted draft law is almost entirely a plagiarism, except for the parts that interest the HDZ, which involve changing the investor from BH-Gas. Now, in this draft law, Article 5, Paragraph 1, reads:

“Article 5.
(Investor)
(1) The economic entity for the production and transport of gas “Južna plinska interkonekcija” d.o.o. Mostar (hereinafter: Investor) is designated as the investor for the “Southern Interconnection BiH and Republic of Croatia” pipeline project.”

At the same time, a section has been added to Article 5, Paragraph 4, which reads:

“(4) The “Southern Interconnection BiH and Republic of Croatia” pipeline project will be fully realized by the Investor, and/or in cooperation with distribution system operators, and/or in accordance with the legal regulations on public-private partnerships and other applicable legal regulations.”

Simultaneously, Article 4, Paragraph 1, concerning BH-Gas, which was the investor and the only public gas transport company in FBiH, has been changed as follows:
“Article 4.
(Interconnection Point)
(1) The coordinates of the interconnection point of the transport systems shall be defined by a special agreement between the two neighboring transport system operators, namely: the economic entity for the production and transport of gas “Južna plinska interkonekcija” d.o.o. Mostar from Bosnia and Herzegovina, with its headquarters in Mostar, as a public company founded by the Federation of Bosnia and Herzegovina, and “Plinacro” d.o.o. from the Republic of Croatia.”

When we look at these three amendments to the law, we get the following result: BH-Gas disappears as the investor of the Southern Interconnection project, and “Južna plinska interkonekcija d.o.o. Mostar from Bosnia and Herzegovina” is appointed as the investor.

Južna plinska interkonekcija d.o.o. Mostar is to be established as a public company founded by the FBiH, i.e., the FBiH Government, with the activity of gas transport in FBiH. The investment in the construction of the southern gas interconnection can now be realized in a way that was not foreseen in the original law at all, namely:

“by the Investor, and/or in cooperation with distribution system operators, and/or in accordance with the legal regulations on public-private partnerships and other applicable legal regulations.”

To clarify, the FBiH Government must now form a new gas transport company based in Mostar, transfer to it everything that BH-Gas has realized up to the urban planning permit (the issuance of which is being blocked by the HDZ), pass a decision that, according to this draft law, the Investor is “Južna plinska interkonekcija,” and enable the investment to be realized by involving non-existent distribution companies from Herzegovina and, most importantly, through public-private partnerships.

The Istraga portal investigated the market and obtained data on who could be the preferred partner in the construction of a 160 km long pipeline worth over 100 million EUR.

According to our information, this is the company ERO plin, based in Mostar, with an initial capital of 70,000 KM. The founder and owner of this company, according to the information we obtained, is Ivica Nuić, a member of the Presidency of Matica Hrvatska. Nuić founded the company in December 2021, and as early as January 2022, the HDZ began actively challenging BH-Gas's role as the investor in the project and blocking the adoption of the Law on Southern Interconnection in parliament.

Information obtained by the Istraga portal indicates that Nuić was a regular guest of Mr. Kabiri at Aluminij Mostar, but that connection has somewhat quieted down since Čović and Kabiri diverged in their views on this investment and other investments in the energy sector. Nuić and Čović remain friends, so we can say, using a Mostar idiom: "Everything for Nuić, Nuić for nothing."

Now we come to the financing method in Article 6, Paragraph 1:
“Article 6.
(Financing Method)
(1) With the support of the Government of the Federation of Bosnia and Herzegovina, the realization of the Southern Interconnection BiH and Republic of Croatia project will be financed through borrowing, grants, budgetary and own funds of the Investor, the public-private partnership (PPP) model, and other sources of financing.”

The original text of the law does not mention financing through a public-private partnership model at all, so the question now arises as to who will stand behind the capital that may be invested in this way.

Now we come to the resolution of property-legal relations, which are regulated in this HDZ proposal as follows:

“(4) The Investor is designated as the beneficiary of expropriation and has all the rights, obligations, and responsibilities of the expropriation beneficiary as provided for by the Law on Expropriation (“Official Gazette of the Federation of BiH”, Nos. 70/07, 36/10, 25/12, 8/15 – Constitutional Court of the Federation of BiH ruling number U-64/14 and 34/16) and the provisions of this Law.”

The Investor is “Južna plinska interkonekcija,” but with this change in the beneficiary of expropriation, the part stating that real estate owned by the FBiH, cantons, cities, municipalities, public enterprises, or public institutions will be expropriated without compensation has been changed/removed. According to this proposal, everything will be paid for, regardless of the ownership structure of the land being expropriated or subject to easements. The change of land use under this proposal will not be carried out by the FBiH Government but by the cantons and the FBiH.

These are partial amendments to the law compared to the original text. It can be said that this is a successful plagiarism aimed at changing the investor, introducing private companies into the project, and forming a new gas transport company in FBiH. BH-Gas, which has worked on this project for years, is being erased by the HDZ's pen, leading to a situation where, after the oil business, which has already been handed over to foreign companies, and the electricity business, which is failing under the auspices of JP EPBIH, we are now facing the gas business, which is to be handed over to the HDZ and private companies owned by individuals close to the HDZ.
The decision on the fate of the “Southern Interconnection” project lies in the hands of the "Trojka."