The $17 billion project on the Xingu River in the northern state of Para is to help the fast-growing Latin American country cope with soaring demand for electricity but has raised concern over its likely impact on the environment and on native Indians.

"It may have been the slowest and most complicated process under my management, after all, it is the third largest in the world ... and a very controversial project," Environment Minister Carlos Minc told reporters in Rio de Janeiro.

The 11,000-megawatt Belo Monte dam is part of Brazil's largest concerted development plan for the Amazon since the country's military government cut highways through the rain forest to settle the vast region during its two-decade reign starting in 1964.

Dams, roads, gas pipelines and power grids worth more than $30 billion are being built to tap the region's vast raw materials, and transport its agricultural products in coming years.

Minc said 250 square kilometers (96.5 sq miles) of land would be flooded by the Belo Monte dam and that this had been reduced from 5,000 in the original plans for ecological reasons.

Environmental groups say the Belo Monte project, which also includes creating a waterway to transport agricultural commodities grown in the Amazon, would damage the sensitive ecosystem with the flooding and threaten some fish species.

Rock star and environmental activist Sting traveled to Brazil in November to call for more debate over the building of the dam. The head of the indigenous Kayapo population, Chief Raoni Txucarramae, said he feared the dam could affect areas where his kin lived.

Among the utilities wanting to build and operate the dam are Brazil's state-run Eletrobras.

The winning bidder would have to pay 1.5 billion reais ($803 million) to create national parks, help monitor forests, and benefit communities affected by the dam.

Minc was to present details of the environmental license later on Monday.

(Reporting by Rodrigo Viga Gaier; Writing by Peter Murphy; editing by Raymond Colitt and Marguerita Choy)