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The Brazilian government plans to relaunch a 1.2bn-real (US$643mn) tender to partially divert the São Francisco river, local news service Agência Estado reported.
Work to divert the river started in 2007 but ground to a halt due to budget overruns and failure by existing contractors to complete works. The total project cost, including the new tender, is estimated at 6.9bn reais.
The initiative includes building 600km of concrete canals spanning the states of Ceará, Rio Grande do Norte, Paraíba and Pernambuco.
The tender is due to be launched in March 2012, said national integration minister Fernando Bezerra.