BRASILIA, (Reuters) – Brazil approved yesterday  an environmental permit for a hydroelectric dam in the Amazon,  an official said, advancing a project the  government hopes will shore up power supplies but critics call  an ecological disaster.

The environmental agency Ibama granted a consortium  including the French utilities giant Suez the license to build  the Jirau dam on the Madeira River, an Ibama spokesman said.

The Jirau project and the nearby Santo Antonio dam are part  of a plan to dam one of the Amazon river’s biggest tributaries  to ensure Brazil’s economy will have sufficient energy supplies  over the next decade.

The two dams, which together form the $13 billion, 6,450  megawatt Madeira River Hydroelectric Complex, will also create  a waterway that would reduce shipping costs for Brazil’s  agriculture exports. Environmentalists say the dam could dramatically change the  nearby ecosystem by flooding hundreds of thousands of hectares,  and they insist the government has not provided enough  safeguards to prevent ecological damage.

A dispute between Suez and Brazilian construction company  Odebrecht over the location of Jirau threatened to spark  lawsuits that would have delayed the project, but the companies  later agreed to settle out of court.

Suez is the lead partner in a consortium developing Jirau  that also includes Brazilian state companies Eletrosul, Chesf  and construction company Camargo Correa.