Dutch grid operator Tennet has failed in its efforts to sell its German operations to the German government, which has cited budgetary constraints as the reason the sale is not going ahead.

Tennet says it is now looking to other public or private options to finance the investment needed for the German grid arm.

Tennet, which is wholly owned by the Dutch government, acquired 11,000 kilometres of the German electricity grid from EON in 2011 and controls around 9,000 kilometres of the grid in the Netherlands.

Caretaker finance minister Steven van Weyenberg told MPs in a briefing on Thursday that the collapse of the deal will hit the treasury to the tune of €1.6 billion in the short term and that money from the pending sale had already been incorporated into government spending plans.

Decisions will have to now be made about Tennet Germany’s future financing, Van Weyenberg said.