A consortium of nine companies has won the right to build a hydroelectric dam on a tributary of the Amazon in Brazil despite pressure from environmental and Indian rights groups.
Brazil's electricity regulator confirmed the Norte Energia consortium, which includes state energy company Eletrobras subsidiary Chesf, along with a group of energy construction companies, will build the dam.
President Luiz Inacio Lula da Silva insists the 11,000-megawatt Belo Monte dam, which would be the world's third-largest, will provide much-needed power for Brazil's fast-growing economy.
Some 500 Greenpeace activists staged a protest at the National Electric Energy Agency in Brasilia, where the tender process was held and dumped three tons of manure in front of the building.
"There are other possible energy sources, such as wind power, biomass or solar," a Greenpeace spokesman said.
The project calls for a massive hydroelectric facility on the Xingu River, a tributary to the Amazon, designed to provide power to local industries and eventually all of Brazil.
The dam is the flagship project of an $878 billion public works crusade that is a key campaign platform of Lula's ruling party candidate, Dilma Rousseff, in this October's presidential election.
Activists estimate as many as 20,000 people, including 800 native Indians, will be displaced by the dam, which will flood 400 square kilometres (154 square miles) in the area.
Critics, including Hollywood director James Cameron and actress Sigourney Weaver, say thousands of fishermen and forest dwellers in the area will be indirectly affected by changing water flows.
They say the project will require as much concrete as was used to create the Panama Canal in order to make two channels that will move the water from the main dam towards the turbines.
The project was originally conceived in 1975 during Brazil's military dictatorship, as part of a larger group of five dams that would generate power throughout the year, even when river flows fell during the dry season.
Due to environmental concerns, authorities in 1994 decided to scrap the four other dams originally planned for construction there, reducing the total area to be flooded.
But during the dry season the river slows to a trickle and will leave the dam generating only a fraction of what it does during the rainy season. That means on average it will supply only 4,600 megawatts or a bit more than a third of its capacity.
Private investors have described the project as highly risky due to the chance of lawsuits and protests halting progress of the operation. Analysts also say the government's cap on the price of power to be sold from the dam is too low, meaning the project offers low returns.
Official estimates show the project costing 19 billion reais (€8.02 billion), though private sector estimates say the figure could be as much as 30 billion reais.
Two of Brazil's largest infrastructure companies walked away from the project this month due to complaints of low financial returns.
The government at the last minute sweetened the deal with a 75 per cent income tax reduction and an improvement in the terms of the financing from the state development bank, helping convince more companies to join the bid.