Stalled development and pending agreement
Plans for the Southern Gas Interconnection between Bosnia and Herzegovina and Croatia remain delayed as developers work through financing, state-property and interstate-agreement issues. A planned agreement with US company AAFS Infrastructure & Energy, initially expected in June, has not yet been concluded. Negotiations with AAFS have continued, but no final agreement has been reached.
Financing structure and demand risk
Project financing is emerging as one of the more difficult issues for the interconnector. Bosnia and Herzegovina’s existing gas demand may be insufficient to support a conventional financing structure. That could require guarantees or other financial backing from the Federation of Bosnia and Herzegovina. Such an approach would shift part of the project’s future demand risk to the public sector.
Interstate framework and state-owned land constraints
The pipeline also requires an interstate framework between Bosnia and Herzegovina and Croatia. Ratification has become linked to wider political disputes, while state-owned property treatment is another potential construction obstacle. Around 30% of the planned route is expected to cross state-owned land. Existing restrictions on disposal of such property mean a legal solution is needed before construction can proceed through those sections.
Route design and potential power-sector anchor demand
The project is intended to create a second gas import corridor into Bosnia and Herzegovina from Croatia. The entry point is near Posusje, from the direction of Zagvozd. From Posusje, the network would extend through western and central Bosnia and Herzegovina, including proposed routes towards Mostar, Bugojno and Novi Travnik, with additional branches envisaged. The planned system is considerably larger than Bosnia and Herzegovina’s current gas demand, leading to consideration of gas-fired power generation as a potential anchor consumer.
Status remains pre-construction
For now, the interconnection remains at the pre-construction stage. Financing, contractual arrangements, interstate ratification and land rights are still unresolved. As a result, the timetable remains highly uncertain based on the issues identified across funding structures, legal frameworks and property access.
