Russian gas export monopoly Gazprom has called off its long-anticipated joint venture to pool power and coal assets with energy major SUEK, the companies said in a joint statement today.
"Meeting the structural and regulatory demands on Gazprom and SUEK would, to a large extent, strain the realisation of the planned strategic venture," the companies said.
In place of the joint venture, which would have formed an electricity giant valued at $15-16 billion, Gazprom and SUEK signed a strategic partnership deal outlining their long-term cooperation in the power sector.
The proposed venture had been seen as one of the major risks for Russia's nascent electricity market, as the two companies would jointly control some 40 per cent of Russia's fossil fuel-based power generation as well as much of the fuel used to run it.
Anti-trust bodies and electricity officials had often voiced fears that this would allow Gazprom-SUEK to dominate the market and stifle fair competition.
In February, negotiations on the merger, which would have given Gazprom majority control of SUEK, appeared to be nearing an end, as the two companies issued a joint statement listing the assets to be included in the venture and announcing plans to sell its shares.
But a source close to the proposed deal told Reuters last month that the negotiations had reached deadlock, and that the prospects for the deal were uncertain.