The German government is due to decide on Wednesday which bidder or bidders it prefers as a partner for the Opel unit of struggling U.S. carmaker General Motors, and could agree to provide aid for the firm.

Chancellor Angela Merkel's government has been considering offers from Italy's Fiat, Canadian supplier Magna International and Belgium-listed industrial holding RHJ International.

In an unexpected twist, China's Beijing Automotive Industry Holding Co emerged as a last-minute contender.

Finance Minister Peer Steinbrueck, asked if the cabinet could agree to provide bridge financing for Opel when it meets on Wednesday, told ARD television: It is quite possible. The time plan will depend on the decisions made in the United States on General Motors.

Steinbrueck said the bridging aid of 1.5 billion euros ($2.10 billion) under consideration would depend on the investors' proposals and whether a deal could be reached on hiving off Opel from its U.S. parent.

Pressure to agree on a partner was growing ahead of a June 1 restructuring deadline for GM set by Washington, which could lead to a Chapter 11 bankruptcy filing by the Detroit-based firm.

Asked whether Germany was set on providing aid, Steinbrueck said: We're interested in success, not in failure. We really want to rescue Opel and the jobs linked to it.

Opel has 25,000 workers at four plants in Germany and the future of the carmaker has become a politically charged subject in the run-up to the federal election in September.

The supervisory board of Opel was holding an extraordinary meeting on Wednesday to decide on its legal separation from the U.S. parent, a person familiar with the matter told Reuters. The board was set to approve a transfer of Opel's non-German European plants to German unit Adam Opel GmbH, the person said.

Asked whether he believed it was realistic that Opel could be hived off from its parent company, Steinbrueck said:

Yes, that's what we're hoping. We hope via this trustee scheme there's a split between General Motors in the United States and GM in Europe with Opel as the main brand on top.

GM will make the final decision on who buys Opel, but Berlin's view is crucial since it is being asked to stump up billions of euros' worth of loan guarantees as part of any deal.

INSOLVENCY AN OPTION

The Financial Times reported that Britain's Business Secretary Peter Mandelson had involved himself in the negotiations, holding talks with the head of GM and GM Europe in an effort to ensure any deal protected two GM-owned plants in Britain.

Belgium's prime minister and the premier of the Flanders region have written to Germany and the European Commission insisting that Opel's future be settled at a European level.

The meeting in Berlin starts at 9 p.m. (3:00 p.m. EDT) but a group of ministers will meet before midday for a preliminary discussion. The politicians could decide on one or more preferred bidders.

Economy Minister Karl-Theodor zu Guttenberg said on Tuesday there was no favorite and insolvency remained an option.

Last week, ministers said the Magna bid, backed by Russian investors, looked the best of the three but since then the bidders have improved their offers.

Fiat Chief Executive Sergio Marchionne made a last-ditch effort to persuade Berlin to back his plan to fold Opel into a transatlantic car empire that would include U.S. carmaker Chrysler, saying on Tuesday he had lowered his request for state guarantees to 6 billion euros from 7 billion euros.

(Additional reporting by Dave Graham in Berlin, Angelika Gruber in Frankfurt, Philip Blenkinsop in Brussels; Writing by Madeline Chambers; editing by Andrew Dobbie)

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