Dubai: Ethiopia says that a controversial multi-billion dollar dam will not restrict the flow of the Nile waters to Egypt and Sudan.

The Grand Millennium Dam, a $4.5 billion (Dh16.5 billion) hydroelectric project, will allow Ethiopia to export electricity to its neighbours and regulate the flow of the Nile to them, Tadesse Haile, Ethiopia's Minister of Industry, said in an interview during a recent visit to the UAE.

"The fact that we are building this dam has nothing to do with [our] neighbouring countries — in fact it is in favour of them. It has no negative impact on water usage [by those countries]," he said.

Ethiopia is the source of 85 per cent of the Nile's flow and was involved in a long-standing dispute with Egypt over the sharing of the river's water. Haile insisted that the dam would not reduce the Nile's flow to Egypt and Sudan.

"It is not the case. By the way, Egypt and Sudan will be enjoying the regulation of the water [flow]... Hydropower does not consume water, it only regulates it, leaves the water to flow... Without this dam, the water could have flown and Egypt and Sudan could suffer as a result of unregulated water by way of a flood, which was the case in the past," he said.

Egypt and Ethiopia will likely sign an agreement to use Nile water on "fair and equitable" terms once a democratic government is elected in Egypt, he added.

Thawing ties

The tense political relationship between Egypt and Ethiopia over water issues is likely to thaw with the new administration in Egypt, given that the former president Hosni Mubarak's government was locked in a stalemate with upstream countries over the rationing of Nile water.

"Defintely. The previous government mentality thought it could benefit by creating a rift between countries. Egypt and Ethiopia are neighbouring countries that enjoy a long historical and cultural relationship."

Ethiopia and other upstream countries — Burundi, Congo, Kenya, Rwanda, Tanzania and Uganda — have banded together to rewrite a 1959 treaty that favours Egypt on the issue of Nile water usage.

Economic prospects

The Grand Millennium Dam, which is currently under construction and expected to generate over 5,000 megawatts of electricity, will change Ethiopia's economic prospects.

"It is really going to contribute to the development of the country. It cost $4.5 billion, it's a huge project. It will have a significant impact on the growth and development of the country," he said.

"As you know, it could be a source of creating competitiveness because energy becomes very important in the future development of any country. It will put Ethiopia on a high and will avail electric power for our future development," he added.

"By then we would also be in a position to be a net exporter of electricity to neighbouring countries including Sudan, Egypt, Kenya, Djbouti and so on."

Construction of the dam began in April. Haile and a host of Ethiopian business community representatives visited the UAE last month to inform investors about opportunities in Ethiopia.