UPDATE 1-Last Dutch hurdle to RWE-Essent deal cleared

* Provincial govt approves stake sale

* Decision follows agreement over unbundling plan (Adds detail, background)

AMSTERDAM May 27 (Reuters) - The government of the Dutch province of North Brabant, the biggest stakeholder in Essent, has approved the sale of shares in the Dutch utility to Germany's RWE (RWEG.DE), clearing one of the last hurdles to the deal.

The government of the province, which holds 30.8 percent in Essent, said it had unanimously decided to sell its stake in Essent's production and supply arm to the German utility, allowing the 8.2 billion euro ($11.4 billion) deal to progress.

More than half of Essent's shareholders, which include other regional and local Dutch authorities, had already approved selling their shares to RWE at both parliament and government level. The deal needed 80 percent shareholder approval.

RWE still needs approval from the European Commission to go ahead with the deal, and hopes to close it in the third quarter, an RWE spokeswoman said.

North Brabant's parliament had initially opposed selling its stake in the utility in a surprise vote in April, but in mid-May it reversed its decision and voted in favour of the deal after long discussions on Essent's future strategy.

The government's decision, which is final, comes after Essent said on Tuesday it had agreed with the Dutch economy minister about its plans to separate its production and supply business from its grid arm. [ID:nLQ711854]

North Brabant said it would remain a 30.8 percent stakeholder in Essent's grid arm, which will carry on as Enexis as part of the unbundling plan and continue to be owned by public shareholders.

Germany's RWE plans the purchase of Essent's production and supply arm, its biggest acquisition ever, to expand its gas and renewable energy operation and give it a foothold in an area just across the Dutch border from its base in northern Germany.

The deal had faced some opposition in the Netherlands due to concerns about RWE's plans for investments in sustainable energy and the takeover's effects on competition.

Shares in RWE were unchanged at 60 euros by 1227 GMT. (Reporting by Catherine Hornby; Editing by Rupert Winchester)

($1=.7172 Euro)