Bulgaria suspends $50 million MiG fighter jet overhaul deal

SOFIA (Reuters) - Bulgaria has had to temporarily halt a pending 81.3 million levs ($49.3 million) deal to overhaul its jet fighters with Russian Aircraft Corporation MiG because of an appeal by Ukrainian arms company Ukrinmash, its defense minister said on Wednesday.

The suspension comes just over a week after the Balkan country asked the Russian company to overhaul and maintain 15 of its ageing MiG fighter jets and was about to sign a four-year deal with it, Krasimir Karakachanov told reporters.

Karakachanov called the Ukrinmash appeal, filed with the Bulgarian competition regulator, “a sabotage attempt” against the ministry’s plans for a direct contract with the Russian company.

The Black Sea country, an EU and NATO member, considered the MiG maker as the only company capable of providing reliable support for the aircraft and did not invite other bidders for the deal.

“The Ukrainian company does not have a license, it does not have capability to carry out such overhauls, he told a news conference.

“In practice, what it has done is an attempt for a sabotage against the decision of the defense ministry to overhaul its aircraft directly with a contract for direct negotiations with RAC MiG,” he told reporters.

“We have yet to find out what the reasons are for the move - whether there are some political motives or some economic motives of those who were unpleasantly surprised by the defense ministry decision not to work with intermediaries,” Karakachanov said.

Relations between Ukraine and Russia are at a low ebb after Russia’s 2014 annexation of Crimea and its backing for separatists in eastern Ukraine.

The appeal has blocked the maintenance of the military jets and because of the timing - at the end of the year - the ministry will need three to four months before it can again secure funds from the state budget for the overhaul, the ministry said in a statement.

Bulgaria says it needs to keep its Soviet-era aircraft operational after plans to buy eight new fighter jets had hit another snag and the process is expected to start almost from scratch sometime next year.

($1 = 1.6501 leva)

Reporting by Angel Krasimirov and Tsvetelia Tsolova, Editing by Richard Balmforth