Russian fertilizer company Phosagro is planning to bid for Potash Corp, according to a media report, rivaling BHP Billiton's $39 billion offer which awaits a crucial ruling from the Canadian government.

Phosagro Chairman Vladimir Litvinenko has asked Russian Prime Minister Vladimir Putin to approve a potential deal and request financing from Russian banks, Russian business daily Vedomosti reported on Wednesday.

The report reignited speculation about a possible bidding war in the world's biggest takeover for 2010 and came on the day Ottowa is expected to tell BHP whether it will approve or reject the deal.

Vedomosti, citing a letter from Litvinenko to Putin, said it was unclear how much Phosagro planned to bid for Potash. Phosagro was not immediately available for comment on the report while BHP and Potash declined to comment. Analysts said it appeared unlikely Phosagro had the financial firepower to make a rival bid.

"I wouldn't have thought they've got the size to bid for Potash Corp," said a Sydney-based analyst, who declined to be named as he does not cover Phosagro.

Russia's biggest fertilizer companies, Uralkali and Silvinit, would be the only ones big enough to bid for Potash Corp, the analyst said, adding that Phosagro would most likely be interested in Potash's phosphates business.

Two Canadian newspapers reported on Tuesday that bureaucrats were advising the government to allow BHP's bid for the world's largest fertilizer market although rumors swirled in the markets that Ottawa would block it.

The federal Canadian government will announce its decision on Wednesday, a source close to the matter told Reuters on Tuesday. Ottawa has until the end of Wednesday to make its ruling public.

No serious rival bidders for Potash have emerged so far. Potash has said it held talks with 15 strategic, financial and state-sponsored potential bidders and investors but admitted in a tough market, a white knight would need more time to raise financing. Potash has flatly rejected BHP's current $130-a-share offer as inadequate and has repeatedly said it expects other offers.

The Russian newspaper quoted Litvinenko as saying in the letter he knows well Canada's government officials who make decisions on the matter as well as Potash's senior management and that they were not against an alliance with Russia.

Phosagro has also secured preliminary agreements with Canadian banks over providing half of financing needed for the deal, while Russian banks should provide the rest, the paper said.

A "yes" from Ottawa will likely prolong the takeover battle and it may well force BHP to raise its bid.

Since BHP announced its bid in late August, the stock has held well above the offer price, as investors bet that a higher bid will eventually emerge.

Canada's Conservative minority government risks alienating its political allies in Saskatchewan if it allows the bid. But the pro-business government risks sending a damaging anti-market message to the global investment community if it blocks the takeover.