GDF Suez SA's (GSZ.FR) Brazilian hydroelectric project is on indefinite hold as a battle between the company and the state where the dam is to be built rages on, a GDF Suez executive said Wednesday.

The 3,300-megawatt power station project in Rondonia state on the Madeira River has been stalled since May 19, with no return date in sight. GDF Suez said the project's total cost was around EUR3.3 billion.

"We can reach an agreement today, tomorrow, or weeks from now," said Gil Maranhao, GDF Suez's director of business development in Sao Paulo.

GDF Suez is the majority stakeholder in Energia Sustentavel do Brasil, formerly known as Enersus. Brazilian construction company Camargo Correa and government energy companies Chesf and Eletrosul are minority partners.

Both Chesf and Eletrosul are owned by Centrais Eletricas Brasileira, or Eletrobras (EBR). Jose Muniz, Eletrobras' chief executive, told congress on Wednesday that the federal power company was losing roughly 6 million reals ($3 million) each day the project was in limbo, the local Estado newswire reported.

Rondonia has been against the project from the start, judging by at least two filings by public prosecutors that stalled early phase construction once last year.

Public prosecutors charged that the Environmental Protection Agency, or Ibama, could not grant a partial license for the project. A partial permit was granted to clear the area for major construction. A similar dam is being built by Brazil's Odebrecht and power companies Furnas and Cemig (CIG) up river.

On Wednesday, Brazil's biggest business daily, Valor Economico, ran a front-page news story saying that Ibama agents rejected GDF Suez's building permit.

But an Ibama press officer said the report was "non-conclusive and was an opinion of agents at the time."

According to the newspaper, a preliminary Ibama report cited GDF Suez in violation of 13 out of 32 environmental requirements, including a study and monitoring of eggs and baby giant catfish specific to the region.

"The only thing between us and the permit now is payment agreements between the consortium, the state government of Rondonia and the city of Porto Velho," Maranhao said.

"We have given them three proposals since this process began back in December and they have rejected us every time," he said.

Maranhao said that the project would be operational by January 2013.

The project is part of the federal government's Accelerated Growth Program, or PAC. Environment Minister Carlos Minc said this week that Ibama would grant the final construction permit once Energia Sustentavel do Brasil partners and Rondonia officials can agree on compensation to the state.

Early last week, Minc predicted that the project would be approved by last Friday.

The press office from Rondonia's public prosecutor's office said the state was meeting with project leaders.

-By Kenneth Rapoza, Dow Jones Newswires; 5511-2847-4541; kenneth.rapoza@dowjones.com