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Brazil to launch canal to drought-stricken northeast this year -minister

BRASILIA, March 19 (Reuters) - A canal set to deliver water to two drought-stricken states in northeastern Brazil is set to go into operation by year's end, a government minister said on Monday.

The canal serving Ceara and Rio Grande do Norte is the second such waterway in a government project to redirect water from the Sao Francisco river to the northeastern region to relieve a multi-year drought.

The first canal went into operation last year and 1 million people are already receiving water in Paraiba state, said Helder Barbalho, who heads the Ministry of National Integration in charge of the project.

In Paraiba, there is already a rebound in agriculture and other areas of the economy following the completion, Barbalho told reporters at the World Water Forum, which opened on Monday in Brasilia.

"We're talking about an extraordinary recovery of the driest region in Brazil," he said, without giving details on the economic recovery.

Cities like Campina Grande in Paraiba were nearing emergency conditions, Reuters found in a visit to the area last year, with a reservoir running down to 4 percent of capacity and agriculture in crisis without irrigation.

A reservoir serving 700,000 people in the Campina Grande metropolitan area, the largest city served by the eastern canal, is now nearly stabilized, Barbalho said. Next week, the government plans to start directing water to fill another reservoir serving 17 municipalities, he said.

With water for human consumption taking precedence, the diversion project has yet to have significant impact on agriculture. Farmers in the area are still restricted to irrigating 0.5 hectare of land, an area smaller than the size of a soccer field, according to newspaper Folha de S.Paulo.

The diversion project, begun by President Luiz Inacio Lula da Silva in 2005, faced years of setbacks from political infighting, budget overruns and corruption.

President Michel Temer jump-started work on the project, making it a priority after taking office in 2016 following the impeachment of Dilma Rousseff.

The northern canal is coming online roughly a year later than expected as the country needed to seek a new builder, Barbalho said, when previous contractor Mendes Junior abandoned work after being accused of involvement in corruption scandal.

(Reporting by Jake Spring Editing by Matthew Lewis)