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news 24 Sep 12

Bosnia's Serb Entity Signs up for South Stream Pipeline

The President of Republika Srpska, Milorad Dodik, has signed an agreement with the Russian company Gazprom to build a part of the South Stream pipeline network and two gas power plants in the entity.

Elvira M. Jukic
BIRN
Sarajevo

Dodik and other representatives of Republika Srpska, the Serb lead entity in Bosnia, signed the memorandum of cooperation with the Russian gas company Gazprom on Friday in Sochi, Russia.

Dodik said on September 21 that the contract also entails building gas power plants, with potentially enough generating capacity to make Republika Srpska one of the most important power producers in the region.

He added that the South Stream is a significant project which would solve the issue of energy sustainability for the whole region. The South Stream is a net of pipelines that will transport natural gas from Russia through the Black Sea and Bulgaria to Italy, Austria, and some Balkan countries.

The head of the Energy Department in the Bosnian Ministry of Foreign Trade and Economic Relations, Mubera Bicakcic, told Balkan Insight that while it was positive that Republika Srpska had signed up for the South Stream pipeline network, it should have consulted the state-level institutions or the Federation entity first.

She explained that although it was good for the country that pipelines would be laid through part of Bosnia, the other institutions in the country should still have been consulted, especially as another project is being considered – the EU and US supported Nabucco project, whose aim is to reduce European energy dependence on Russia.

“The problem is that we do not have a state-level strategy for energy, even though it is a priority area for Bosnia and Herzegovina in the process of the EU integration,” Bicackic said, “This is because the RS wants to be independent in energy planning.”

Bicakcic explained that according the law, an entity like RS can sign international agreements, but in this specific case it had to ask the responsible state-level ministry for approval.

“We did not get any notification in the Ministry,” Bicakcic said.

The Prime Minister of Republika Srpska, Aleksandar Dzombic, told the local media that the contract Dodik signed is a key investment for the future development of the entity

Gazprom and the government of Republika Srpska will form a joint company in the next year, after which the exact path of pipelines will be determined and construction work will begin.

Dodik explained that the joint company would ensure a stream of credit and foreign cash for the project, adding that the Gazprom Bank might provide extra security for the project through a loan.

Hamza Karic who lectures on international relations at Sarajevo's Faculty of Political Science, welcomed the fact Republika Srpska had signed the contract but said that the other Bosnian entity has to follow their lead, when it came to energy policy.

"If this project is implemented it would represent a success for the political leadership of the Republika Srpska entity,” Karcic said, “It is important that representatives of the Federation [the other entity] become more proactive in achieving cooperation with Gazprom and other companies in this sector.”

 

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