The proposal to build Belo Monte, which would be the world's third-largest hydroelectric dam, has sparked protests in Brazil and abroad because of its impact on the environment and native Indian tribes in the area.

A federal court in Para state, under judge Ronaldo Desterro, has halted plans for the construction because environmental requirements for the project had not been met. These included contingency plans to assure transportation along rivers where the dam is expected to reduce the water level sharply.

The national development bank, BNDES, has also been prohibited from financing the project by the court.

The construction of the dam, in the world's largest rainforest, was to begin soon. The project is estimated as being worth up to $26 billion.

It has angered environmentalists, with hundreds of people taking part in a protest in Brasilia in February. They handed over a petition with 600,000 signatures against the project.

Last week the president of Brazilian firm Energy Research Company (EPE), responsible for electric power projects in Brazil, defended the construction to the international press. Maurício Tolmasquim insisted that just a "small minority that does not accept any form of hydroelectric power" was against the construction.

He said that the biggest public hearing ever conducted in Brazil's history had taken place during the evaluation of the environmental licence for Belo Monte, and that he inhabitants of Para, in north Brazil, were not opposed to the dam's construction.

"Four technical seminars were conducted in Belém (the state's capital), 30 meetings were held with villages of indigenous people", he said.

The main benefit of Belo Monte, Tolmasquim added, was the clean and cheap energy that would be made available to the Brazilian market. "Belo Monte enables Brazil to meet two goals: to provide electric power to boost economic growth while at the same time avoiding emissions of greenhouse gases."

The licence for the building of the dam was granted in early January by IBAMA, the Brazilian environmental agency.

If upheld, the Para court ruling would be a serious setback to President Dilma Rousseff's plans for large investment in infrastructure projects.

Public works projects in Brazil often face legal hurdles, although many are overturned quickly.

The auction that granted the building rights to Belo Monte in April 2010 was suspended twice because of an injunction.

The Norte Energia consortium building the dam, led by Brazilian state-controlled power utility Eletrobras, said it would not comment on the court decision as it had not yet been officially notified about the ruling.

Belo Monte was to be built with a power of 11,000 megawatts, but would generate, on the average, only 40% of this.

Earlier this month, French company Alstom announced it won a 500m euro contract to supply Norte Energia with power equipment.

Source: The Guardian (UK)