SOFIA Aug 19 The company planning to build a section of the controversial South Stream natural gas pipeline in Bulgaria has raised capital, defying an order to halt preparations for the project, the economy ministry said on Tuesday.
Mindful of European Commission concerns about the Russia-led project, authorities in EU member Bulgaria this month ordered preparations be halted until the plans are shown to comply with EU rules.
Yet the South Stream Bulgaria joint venture has proceeded to raise its capital to 397.6 million levs ($270.86 million) from 15.588 million, the interim economy ministry said in a statement.
"This move ...constitutes a violation of a protocol decision by (Interim Economy Minister) Vasil Shtonov dated Aug. 11 to suspend all actions on the project," it said.
South Stream would carry Russian gas across the Black Sea to Bulgaria and onward, bypassing Ukraine.
Brussels and Moscow have clashed over the crisis in Ukraine including Russia's annexation of Crimea.
In energy the European Commission and Moscow have also disagreed over EU rules calling for gas suppliers to ensure third-party access to related pipelines.
South Stream Bulgaria is an equal joint venture between state-owned Bulgarian Energy Holding (BEH) and Russian gas exporter Gazprom.
The ministry said BEH's actions were not in Bulgaria's best interests, adding it would refer the case to prosecutors.
It said while the capital hike did not constitute the launch of construction, it did allow for the continuation of preparatory work.
Bulgarian President Rosen Plevneliev, who named an interim government two weeks ago, said the project would remain on hold pending approval from the EU.
A document came to light this month showing Bulgaria's previous government issued a construction permit for the pipeline despite earlier announcing a freeze.
The capital increase was entered into the commercial register on Monday, the same day Economy Minister Shtonov said BEH had opted out of it.
Shtonov said he had instructed BEH to discontinue all tendering and contracting procedures.
BEH issued a statement saying it had taken all necessary actions to halt activities related to the South Stream project.
It said such activities would remain on hold until all issues related to the awarding of a contract to design and build the Bulgarian section of the pipeline had been clarified.
(1 US dollar = 1.4679 Bulgarian lev) (Reporting by Angel Krasimirov; editing by Jason Neely)