Brazil's BNDES approves $10.8 bln loan for Amazon Belo Monte dam
* Loan is largest in BNDES history
* Controversial Belo Monte dam to cost nearly $14 bln
* Belo Monte to be world's 3rd-biggest hydroelectric dam
RIO DE JANEIRO, Nov 26 (Reuters) - Brazil's state development bank, BNDES, said on Monday it has approved a loan of 22.5 billion reais ($10.8 billion) to Norte Energia SA, the group building the controversial Belo Monte hydroelectric dam in the Amazon.
The loan is the largest in the bank's history and will finance nearly four-fifths of the dam project, estimated at 28.9 billion reais.
Forty percent of the loan, or 9 billion reais, will be funneled through two banks - 7 billion reais through Brazil's state-owned Caixa Economica Federal (CEF) and 2 billion reais through Brazilian investment bank BTG Pactual SA.
The Belo Monte dam on the Xingu River has a maximum designed capacity of 11,233 megawatts, or 33 percent of Brazil's projected new generation capacity between 2015 and 2019.
The government considers the dam essential for Brazil to meet the power needs of an expanding economy and for limiting the need for fossil fuels such as oil, natural gas and coal.
Environmentalists say the dam, along with the workers and roads needed for its construction, will threaten fragile ecosystems and the livelihood of local farmers, fishermen and Indian tribes.
Belo Monte is designed to be the world's third-most powerful hydroelectric dam after China's 22,000 megawatt Three Gorges project and the 14,000 megawatt Itaipu dam on the Brazil-Paraguay border.
At full tilt, the dam will generate enough electricity to supply 60 million people, or 30 percent of Brazil's population. Because the dam will use water power from the river's flow instead of a large artificial reservoir, it will only have an average potential of about 4,500 megawatts, less than half the maximum capacity.
Norte Energia is a consortium of state-led electricity holding company Eletrobras, Neoenergia, a Brazilian utility headed by Spain's Iberdrola, and Cia Energetica de Minas Gerais, a utility controlled by the government of Brazil's Minas Gerais state.
Other consortium partners include Brazilian utility Light Servicos de Eletricidade SA, mining company Vale SA , the world's largest iron-ore producer, Vale-backed Brazilian-Chinese iron-ore pellet producer Sinobras, and J. Malucelli Energia.
Petros, the employee pension fund of Brazilian state-led oil company Petrobras and Funcef, the employee pension fund of CEF are also partners.
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