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NEWS ROUNDUP 20 Nov 2017

Sanctions for the energy sector once again looming over Bosnia and Herzegovina 

Tijana Cvjeticanin recommended by Tijana Cvjeticanin Istinomjer, Bosnia and Herzegovina

B&H is already the first country that was sanctioned by the Energy Community. Now it is about to be rebuked for a third time.

Bosnia and Herzegovina Smoke signals

Why this story matters:

economy

B&H doesn’t have a state ministry of energy. There is strong opposition from the authorities of Republika Srpska, one of the country’s two entities, to either establish institutions or adopt regulations on energy on the state level. Both of these facts have continuously been putting B&H’s status in the Energy Community at risk.

The Energy Community is an international organization established in 2006, made up of the EU and the neighboring countries. Their mission is:

“to extend the EU internal energy market rules and principles to Southeast Europe, the Black Sea region and beyond, on the basis of a legally binding framework.”

The first sanctions against B&H were introduced in 2015, after the country failed to adopt the obligatory regulations in the area of gas and electricity by the agreed deadline.

When the sanctions were reintroduced in April 2017, the state Ministry of Foreign Trade and Economic Relations drafted a law regulating the use of electric energy and gas. Republika Srpska’s ministry was consulted and all their remarks and regulations were adopted. However, to this day, RS has not issued a response to the final law proposal.

In the meantime, Republika Srpska started working on its own legislation in this area, in clear breach of the agreed “timetable”, which declared that the law has to be adopted on the state level first.

This resulted in another “strong warning” from Janez Kopac, the director of EC’s Secretariat, expressed in a letter sent to the RS Prime Minister, Željka Cvijanović.

This time, he said, if the obstructions continue and the agreed benchmarks are not met, the sanctions will be designed specifically to strike the Republika Srpska, not the state.

Judging by the EC’s previous actions, these are not empty words. It is a threat that carries a real possibility of stripping B&H of tens of millions of euros in funding for its energy sector.

Details from the story:

  • Bosnia and Herzegovina has been a contracting party in the Energy Community since it was established.
  • In 2015, the deadline for B&H to implement its obligations under the Second Energy Package expired.
  • The Energy Community decided to introduce sanctions against Bosnia and Herzegovina in October 2015.
  • It was decided that the sanctions will be in place for one year.
  • The sanctions were lifted in October 2016, after an agreement on the matter was reached between the entities’ ministers of energy and the state minister of foreign trade and economic relations.
  • The sanctions were reintroduced on April 1, 2017, after B&H failed to meet the deadlines agreed on in October 2016.
  • After the sanctions were put in place, it was announced that the Energy Community will discuss the BiH case in October, to decide whether to put in place additional sanctions, including withdrawing funding for the energy sector in the country.
  • In his letter to the RS prime minister, the director of EC Secretariat stated that, if the sanctions are reintroduced, they will specifically target the entities (Republika Srpska and the Federation of Bosnia and Herzegovina).
  • No agreement has yet been reached, and the conditions required to avoid sanctions are still not met.
  • B&H has to amend the state legislature on the regulation and distribution of electric energy and gas. Otherwise it will lose millions in funds for the energy sector.

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