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Bosnia-Herzegovina Infrastructure Report Q4 2011
Business Monitor International, Sep 2011, Pages: 58
A number of foreign investors have shown considerable interest in the development of Bosnia & Herzegovina (BiH)’s infrastructure, with a focus on transport and energy during the first seven months of 2011. Recent months have seen BiH place increasing importance on energy infrastructure, as the country becomes more likely to emerge as a net importer of electricity. In addition, transport projects focused in Sarajevo and the surrounding areas should bring benefits to the population, and alongside developments in the country’s tourist resorts, may improve the prospects for the tourism industry as a whole in BiH.
Developments in recent months indicate that there are a number of determinants of growth in BiH’s infrastructure:
- In July 2011, BiH confirmed that it would regulate its railway system in line with EU principles. EU backing and possible funding initiatives could provide the solid basis required for expansion of BiH’s infrastructure.
- Backing of foreign companies has proved essential for the development of BiH’s infrastructure, but developments of recent months have seen increasing competition to invest in the country. In July 2011, the bidding deadline for a contract to jointly develop hydropower facilities on the country’s Drina River was extended, with German and Chinese utilities, among others, expressing their interest in the tender. Meanwhile, in a significant move for the country’s energy and utilities infrastructure, Bosnia’s Mine and Thermal Power Plant formed a joint venture (JV) with Cypriot Consar Energy for the expansion of the Ugljevik plant in July 2011.
- Improvements to infrastructure, including upgrade work to its rail links with Budapest and Croatia should go some way to helping BiH’s integration within the wider European community, while encouraging development within the country’s own economy.
Development of BiH’s infrastructure is highly dependent on the maintenance of social and political calm in the country and surrounding areas. Taking these factors into account, BMI expects BiH’s construction industry to grow by 2.7% in 2011, rising to 3.6% in 2012. Capital investment should total around US$4.97bn in 2011, rising steadily over our forecast period to US$6.8bn in 2015.
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