Bosnians Fear Knock-on Effect of Gas Price Hike

Bosnia and Herzegovina will hike the retail price of fuel as of February 1, the first increase of this year.

A new Excise Law, adopted in mid-December, after almost a year of the negotiations, long debates in parliament and amid resistance from opposition parties, came into force at the beginning of January.

As a result, from February 1, fuel prices will be adjusted at all gas stations, rising by about 10 per cent.

Bosnia's Foreign Trade Chamber said people will pay an additional 0.15 Bosnian marks per litre plus VAT, amounting to 0.18 marks in total, equal to about 9 cents.

In the Bosnia's mainly Serbian entity, Republika Srpska, the new prices have already been set: diesel will now cost 2.09 marks and petrol, 2.08 marks per litre.

The prices of more ecologically acceptable fuels, such are liquid natural gas, LNG, and biofuel will increase the most, because of the new Excise law.

In the EU, use of these "greener" fuels is stimulated but in Bosnia, the price of the LNG is increasing by almost 40 per cent and the highest excise of all [0.70 marks] is being introduced on biofuel.

New fuel prices in the Federation, Bosnia's other entity, are not specified as yet, but it is already clear that, from February 1, Bosnia no longer will have the cheapest fuel in the region.

Economists warn that the hike in fuel will have an inflationary effect on other product prices, such as the price of food and other products that people need on a daily basis.

"You can only imagine what will happen with the price increases in heating, bread, basic groceries, transport and so on," economic analyst Predrag Dudukovic told BIRN.

The increased revenue from fuel is intended to support development projects such as road-building and...