Brazil's state-owned utility Eletrobras and the Queiroz Galvao group are to build the Tumarin hydropower plant in Nicaragua.
The project (pictured, artist's rendition) will be completed in 2019 and is expected to produce 253 MW, which will supply 21 per cent of the country's overall energy consumption.
Centrales Hidroeléctricas de Nicaragua (CHN), a subsidiary of Eletrobras, has announced that the works will cost $1.1bn.
The reservoir will be located 470 km northeast of Managua and will cover 41 square km. The project includes 81 km of electric transmission lines.