Brazil awarded a contract to build and operate the world's third-largest hydroelectric plant on a tributary of the Amazon River, amid vocal protests by environmental activists.
The project, called Belo Monte, went to a bidding group led by the state-run electricity utility and including builder Construtora Queiroz Galvão SA and various Brazilian engineering firms.
Brazil is pushing ahead with the project despite questions about its economics. Several major construction firms didn't participate in the auction, partly because of concerns that electricity price caps built into the contract would hurt the project's profitability.
After the contract was awarded, Queiroz Galvão said it is reconsidering its participation, potentially leaving the undertaking chiefly in the hands of government-controlled companies.
The plant, estimated to cost at least $11 billion, would produce around 11,000 megawatts of power. Only China's Three Gorges Dam and Itaipu, jointly operated by Brazil and Paraguay, are bigger.
Belo Monte is part of Brazil's broader strategy to power economic growth by harnessing its rivers. Unlike most major economies, Brazil gets most of its energy from river dams. The strategy has become controversial as Brazil reaches into the Amazon basin, where many of the nation's untapped rivers remain. Brazilian authorities argue that relying on hydropower is better for the environment than burning other sources of energy like coal or fuel oil. Environmental impact can be mitigated by planning and new technologies, they say.
Critics of the project argue that the project will injure wildlife and upend the lives of Indians who live near the Xingu River. Hollywood's James Cameron, director of Avatar, has traveled twice to the region to meet with Indian groups.
On Tuesday, Indian protesters vowed to build dwellings on an island at the Belo Monte dam site in order to prevent construction; Greenpeace dumped manure at a state electricity utility.
Construction of the dam is sure to face additional hurdles, including protests and legal challenges. The auction process was temporarily halted three times by injunctions that were later overturned.
The Belo Monte project has been on the drawing board for decades, and controversy isn't new. During an information session about the project in 2008, Indians armed with clubs and machetes attacked an engineer after his presentation, leaving him with a deep gash in his arm.