Brazil's state-run development bank BNDES said Monday it had approved $11.25 billion in loans to finance construction of the controversial Belo Monte mega-dam in the Amazon basin.

"The BNDES management approved 22.5 billion reales ($11.25 billion) in loans to the Norte Energia (consortium) for construction of the Belo Monte hydroelectric dam on the Xingu River" in the northern state of Para, the bank said in a statement.

It noted that the project, which got under way more than a year ago and which next year will employ more than 20,000 people, will cost a total of $14.45 billion.

Some 11 percent of the BNDES loans, around $1.6 billion, will be earmarked for social and environmental programs to mitigate the impacts of the dam on the region.

Expected to produce 11,000 megawatts of electricity, Belo Monte would be the third biggest dam in the world, after China's Three Gorges facility and Brazil's Itaipu Dam in the south.

It is one of several hydroelectric projects billed by Brazil as providing clean energy for a fast-growing economy.

Indigenous groups fear the dam across the Xingu River, a tributary of the Amazon, will harm their way of life.

And environmentalists have warned of deforestation, greenhouse gas emissions and irreparable damage to the ecosystem.

The dam is expected to flood some 500 square kilometers (200 square miles) along the Xingu and displace 16,000 people, according to the government, although some NGOs put the number at 40,000 displaced.

The dam's first turbine is due to start operating in 2015 and the last one in 2019.