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Ambassador Murphy’s Remarks at BiH Energy Summit 2023
April 26, 2023


Good morning, and welcome to Neum.  I am pleased to be back here for the 2023 BiH Energy Summit.  Thank you to our summit partners, and to everyone here, for joining us to focus on the critical issue of energy sector reform in Bosnia and Herzegovina.

Since the United States organized the first BiH Energy Summit in 2015, all of us here – representing government, the energy industry, the private sector, civil society, and the international community – have together made important progress toward greater energy security and the transition to a sustainable green energy economy for BiH.  Year after year, discussions and collaboration that happen right here at this summit have produced results in the BiH energy sector, such as the adoption of energy strategies, emission reduction plans, and electricity and renewable energy legislation.  But our work is far from done.

Last year, I stood at this podium and urged BiH’s political leaders to make more progress toward fulfilling their 2019 Joint Statement – signed by representatives from the state and entity governments – which committed them to pushing energy reforms forward.  As I said last year, reforming the energy sector is not a luxury.  It is an imperative.  It is necessary to propel BiH’s economic development and to transition to more sustainable sources of energy.

There has been some progress since that 2019 pledge, such as the development of important new laws in the Federation, the Republika Srpska, and Brcko District.  For example, there are now three critical pieces of legislation before the Federation parliament:  the Electricity Law, the Energy Law, and the Renewable Energy Sources Law.  I hope Federation lawmakers will proceed with the final adoption of these laws without further delay.  That is the good news.  Unfortunately, we have seen little progress on most of the commitments made in the 2019 pledge, especially at the state level.

It is with this in mind that I must emphasize the importance of adopting state-level Electricity and Natural Gas legislation, which would lay the foundation for a single set of rules across BiH, for the proper functioning of energy markets, and for transparency of the system.  All of this is necessary to further harmonize BiH’s electricity and natural gas sectors with EU regulations.  Piecemeal amendments that fall short of aligning the BiH electricity and natural gas sectors with EU regulations are insufficient to move the sector in the right direction.  The goal must be to get this right the first time, not to produce a half measure that then requires passage of additional legislation at some later date.

The adoption of state-level energy laws that are in line with EU Energy Directives is also the only way to deepen BiH’s integration with regional and EU energy sectors and markets.  For example, a state-level electricity law would allow for the establishment of an electricity power exchange.  This would enable BiH, through market coupling, to become part of the existing single European market.

And this matters because it would allow electricity producers to more efficiently, more transparently, and more profitably buy and sell electricity.  A BiH that generated more electricity, more efficiently would also generate more jobs and more economic growth for the country.

New state-level legislation on natural gas would also ensure a freer and more competitive natural gas market in BiH by, among other things, making BiH’s natural gas rules and market compliant with EU regulations.  I also want to clear up some confusion about where jurisdiction lies for natural gas: it rests ultimately with the state, as reaffirmed by the 2007 BiH gas agreement, which President, then Republika Srpska Prime Minister, Dodik supported because he knew it would benefit the Republika Srpska and its citizens.  The same is true today with the proposed state-level law on natural gas.  As BiH’s gas sector continues to grow and plays an even more important role in BiH’s energy transition, cohesive state-level governance will be even more critical.

Deeper regional and EU integration will increase collective energy security and the diversity of energy sources in the region, which, as we all know, is even more urgent because of Russia’s aggression in Ukraine.  The Southern Natural Gas Interconnection pipeline to Croatia, for example, will offer BiH an alternative and reliable source of natural gas from Europe and integrate the BiH natural gas transport network with the EU network and market.  For the project to move forward, the Federation of BiH House of Peoples must adopt the Law on the Southern Interconnection – as passed by the Federation House of Representatives – without further delay.  The new Federation government must also begin the work to secure financing for this important project as soon as it takes office.

Calls to create a new gas operator specifically for the Southern Interconnection project do not make sense from a technical or economic perspective.  The Federation’s gas transmission system operator, BH-Gas, is the guarantor of energy security for the entire Federation.  Instead, the focus must be on empowering BH-Gas, as a single company, to serve consumers, businesses, and distributors across the entity.

This, too, should be an immediate priority of the new Federation government.  This is the only viable path forward.

Beyond the risks Bosnia and Herzegovina faces from its reliance on Russian energy sources, weak cyber security poses a growing threat to the country’s energy supply.  As BiH works to make the energy industry more secure, BiH must also prioritize protecting critical energy infrastructure, such as electricity networks and gas pipelines, from cyberattacks.

I am pleased to see that this topic will be discussed at this year’s Summit as cyberattacks have already happened in the BiH energy sector.  Tomorrow, USAID will present a case study from the ransomware attack on cantonal gas distributor Sarajevogas.  I hope that all participants will take a moment to reflect on this important issue and work with us to strengthen cyber security in the energy sector.

All the important reforms that I have mentioned are also critical to addressing climate change, which is already having real impacts here in BiH.

These reforms will unlock much-needed private sector investment that can accelerate BiH’s energy transition by integrating new, greener technologies and renewable sources into BiH’s energy mix.

Today, the Ministry of Foreign Trade and Economic Relations will present the integrated National Energy and Climate Plan, the NECP, which will chart the future of the entire energy sector.  The NECP, with a clear commitment to decarbonization, and increased uptake of renewable energy and energy efficiency, will be instrumental to securing international financing for the energy sector in BiH and chart a smarter, wealthier, and healthier future.  I hope the Chairwoman Kristo’s government will quickly adopt the NECP.

If my message today sounds demanding, that’s because it is.  There is only a limited amount of time for BiH to set its energy future on the right path, both to make it more resilient to threats and to enact critical reforms to address the worsening climate crisis.  But no one in the international community is asking BiH to do this alone.

The United States has long been a steadfast partner to BiH’s energy sector.  We, along with our international partners, – including those who have joined us in organizing this summit – are committed to supporting BiH’s transition to a more secure and greener future.

Thank you again to everyone here for joining us today and demonstrating your commitment to BiH’s energy transition and economic development.  It is the citizens of BiH who benefit from everyone coming together to share their wealth of experience and expertise to collaborate on a path forward for BiH’s energy sector, and it is the citizens who will suffer if political leaders choose to not show up for their constituents and let politics get in the way of progress.  I am looking forward to a successful summit.