In October, state-controlled Fortum agreed to buy a stake of more than 20.5% in Uniper for 2.3 billion euros, bringing its total holding to more than 70.5%.

The deal, however, is subject to approval in Russia, where regulators have so far capped Fortum's ownership of Uniper at 49.99% due to a water licence operated by the German firm's local subsidiary Unipro.

The licence is considered strategic under Russian law, as is related small-scale water supply activity, putting a limit on foreign ownership of Uniper under current rules.

Fortum has already outsourced water supply at its Russian power plants to a qualified Russian entity, it said in 2018.

The anti-monopoly service is considering changing the regulations so that Uniper's water supply activity could be outsourced and Fortum could raise its stake in Uniper, Interfax quoted Igor Artemyev, the head of the regulator, as saying.

He added that technically the service could grant its approval to the deal but only on condition it closes after necessary changes to Russian law have been made.

"If the law is not changed, under today's conditions the deal is possible only in one case - with the condition that it will come into force only when the changes in the law are adopted. But this can be done," Artemyev said.

Uniper declined to comment. Its chief executive Andreas Schierenbeck was quoted as saying by the Frankfurter Allgemeine Zeitung on Tuesday: "We are not part of the talks between the Russian authorities and Fortum."

Fortum has been seeking control of Uniper since 2017, but the German company's management have opposed a full takeover, warning it could result in a break-up of the firm and threaten its credit rating.

Uniper said last week Fortum had yet to address a range of questions from Uniper's management to convince it to support a takeover deal.

(Reporting by Polina Devitt; additional reporting by Tom Käckenhoff and Anne Kauranen; editing by David Evans and Kirsten Donovan)