Plans to merge Gaz de France and Suez to create the world’s second-largest energy group on Monday cleared at least one political hurdle as the French government put a timetable on crucial legislation to privatise the gas group.

Thierry Breton, finance minister, said the cabinet would review a draft law on liberalisation of the energy market on June 28. The law, which has been violently opposed by members of the government’s own centre-right UMP party, will include a clause allowing the government to reduce its stake in GdF to 34 per cent.

Mr Breton said parliament would be recalled early, sometime in September, to debate and vote on the law.

Although the government, in effect, has delayed the privatisation – taking a risk that it will be voted down in September – insiders said the fact that the UMP party had agreed to the timetable and extraordinary parliamentary session, was “politically very important”.

The decision was taken after prime minister Dominique de Villepin met his rival Nicolas Sarkozy, interior minister and head of the UMP and Bernard Accoyer, leader of the party in the National Assembly. In the face of reservations among his members, Mr Sarkozy had urged the government to consider a compromise such as an exchange of shares between the two companies.

On Monday, Suez and GdF welcomed the decision as a step forward, although privately some admitted significant obstacles remained.

Come September, the thoughts of most UMP deputies will be focused on next year’s presidential elections. Many fear it could fall victim to discontent with Mr de Villepin, closely linked with the plan after unveiling it in February to thwart a possible bid for Suez by Enel of Italy. Speculation that Mr de Villepin could be replaced as prime minister adds further uncertainty. However, observers believe his departure could make it easier to sell the plan to opponents.

The delay gives the government a crucial two months to resolve outstanding concerns in its parliamentary majority.

Meanwhile, the European Commission on Monday said it would extend its investigation into the companies’ merger plans. The Commission will take a further four to five months to scrutinise the impact of the deal.

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