A Brazilian court on Thursday lifted a lower court order that suspended the construction of a controversial hydro-electric project in the Amazon rainforest, signaling a victory for the Brazilian government’s plan to upgrade the country’s energy infrastructure.

The development came days after a lower court blocked plans to construct the Belo Monte hydroelectric dam in the Amazon rainforest citing environmental concerns. Lower court judge Ronaldo Desterro said in his ruling made last month that the environmental requirements to build the dam had not been met by the builders.

Citing concerns that the dam would sharply reduce water level in Amazon’s tributaries if the requirements are not met, Judge Desterro also ordered the national development bank, BNDES, not to fund the project.

Earlier, the bidding of the project was stopped thrice since it was first proposed in the 1990s. The signing of the contract for constructing the dam was made possible only after a final court appeal by the government allowed the Norte Energia consortium, led by the state-owned Companhia Hidro Eletrica do Sao Francisco, to be awarded the contract.

Although the licenses have not be granted to the Norte Energia consortium for the construction of the controversial dam, the Brazilian environment agency Ibama gave its approval to clear the land at the site in January.

Opponents to the 3.75-mile-long dam argue that it will inundate about 190 square miles of virgin Amazon rainforest, thereby causing irreparable environmental damage to the region. Environmental campaigners say that the camp will displace more than 50,000 Red Indians.

However, the government says that the dam is crucial for development, pointing out that the project will provide thousands of jobs for the local population. It claims that the dam, when it becomes operational in 2015, would provide electricity to more than 23 million homes.

Officials say those displaced by the dam will be adequately compensated as the bid-winning consortium has promised to pay $800m for protecting the environment and for rehabilitation of those affected by the project.

The construction of the proposed dam is expected to cost between $11bn and $17bn. When completed, it will be third largest of its kind in the world, after the Three Gorges in China and Itaipu dam being jointly run by Brazil and Paraguay.