The Belo Monte dam, under the auspices of state power company Eletrobras, would be one of the world's largest hydroelectric power plants, after China's Three Gorges and the Itaipu dam shared by Brazil and Paraguay.

More than 1,000 environmentalists and tribal Indians gathered this week in the town of Altamira in the northern state of Para to protest against the dam and discuss alternatives.

An Eletrobras official, Paulo Fernando Rezende, was injured and temporarily hospitalized on Tuesday in a skirmish with Kayapo Indians armed with clubs and machetes who had started a war dance in response to his upbeat presentation.

Eletrobras condemned the incident and said on Wednesday its planning for Belo Monte would not be deterred by protests.

Riot police are guarding the event in Altamira, where activists are planning a demonstration on Friday.

In 1989, an Indian protest forced a similar dam project to be abandoned. Then, pictures of a Kayapo Indian woman holding the blade of her machete to the face of today's Eletrobras president figured prominently in local and foreign media.

The Belo Monte reservoir would flood around 440 square km (170 square miles) and divert part of the Xingu, which flows north to the Amazon river.

Residents fear their source of fish and water is endangered and say construction and new roads will draw more settlers and farmers, accelerating deforestation.

"Roads, buildings, service companies -- like most big projects in the Amazon, the dam will bring much destruction and little benefit for residents," said Ana Paulo Santos Souza of the group Foundation Live, Produce and Protect.

"INEFFICIENT"

The last major dams built in the Amazon in the 1970s -- Tucuruvi and Balbina -- caused food shortages and dead rivers and displaced thousands of people, the environmental group ISA said.

Critics say the government is ignoring conservation concerns about the project. Silva, a former activist in the Amazon, had been increasingly isolated in the government over her opposition to big infrastructure projects in the region.

"This government sees environmental licensing as a mere bureaucratic process. They don't really care what the impact study shows," Marco Antonio Delfino, an Altamira public prosecutor, told Reuters by telephone.

A court last week temporarily suspended preparations for the project's tender next year, citing irregularities in the environmental licensing process, Delfino said.

With Brazil's economy growing at around 5 percent per year, hydroelectric plants along the many rivers of the vast Amazon region are essential to ensure power supply in the next decade, the government says.

"Brazil needs clean energy with the lowest cost to society," Eletrobras said in a statement. Belo Monte was the best option because large quantities of energy were easily integrated into the national grid, it said.

On Monday, a consortium led by French utility Suez won a concession to build one of two hydroelectric plants, together worth more than $12.7 billion, along the Amazon's Madeira river.

Construction of Belo Monte would take 5 years and the plant would generate more than 6 percent of Brazil's power needs.

Because of seasonal rains, the plant will produce less than 10 percent of its capacity of 11,181 megawatts during nearly half of the year, preliminary Eletrobras studies show.

"It's going to be the most inefficient dam in the world," said Glenn Switkes, director of the International Rivers group.