Ethiopia's construction of Africa's largest hydroelectric dam on the world's longest river threatens to affect flows of water to Nile-dependent, water-starved Egypt, where there is growing outrage, anger and fear.

Egypt in the past has threatened to go to war over its "historic rights" to Nile River water but diplomats from both countries this week played down the potential for conflict.

"A military solution for the Nile River crisis is ruled out," Egypt's irrigation and water resources minister, Mohammed Baheddin, said Thursday amid newspaper reports recalling the threats of war from Egypt's two previous leaders, Anwar Sadat and Hosni Mubarak.

Ethiopia on Tuesday started diverting the flow of the Blue Nile for construction of the Grand Ethiopian Renaissance Dam. Eighty-five percent of Nile waters originate in Ethiopia yet the East African nation whose name has become synonymous with famine thus far utilizes very little of those waters.

Colonial-era agreements

Ethiopia's decision challenges a colonial-era agreement that had given downstream Egypt and Sudan rights to the Nile water, with Egypt taking 55.5 billion cubic metres and Sudan 18.5 billion cubic metre of 84 billion cubic metres, with 10 billion lost to evaporation. That agreement, first signed in 1929, took no account of the eight other nations along the 6,700-kilometre river and its basin, which have been agitating for a decade for a more equitable accord.

And Ethiopia's unilateral action seems to ignore the 10-nation Nile Basin Initiative to promote co-operation.

Ethiopia is leading five nations threatening to sign a new cooperation agreement without Egypt and Sudan, effectively taking control from Egypt of the Nile, which serves some 238 million people.

Mohammed Abdel-Qader, governor of Egypt's Gharbiya province in the Nile Delta, warned the dam spells "disaster" and is a national security issue for the North African nation.

Dam spells "disaster"

"Taking Egypt's share of water is totally rejected ... The Nile means everything to Egypt," said Gov. Abdel-Qader.

Baheddin said Egypt already is suffering "water poverty" with an individual's share of 640 cubic metres well below the international average of 1,000 cubic metres.

Egypt protests that others along the Nile have alternative water sources, while the Nile is the sole water source in the mainly desert country.

Ethiopian officials say the dam is needed to provide much-needed power for development.

At a ceremony marking the diversion of the Nile, Deputy Prime Minister Demeke Mekonnin said Ethiopia could export cheap electricity from the dam to energy-short Egypt and Sudan. He insisted the dam would not affect the flow of water to Egypt.

Experts say otherwise.

Alaa el-Zawahri, a dams engineer at Cairo University and an expert on a national committee studying the ramifications of the Ethiopian dam, said Egypt stands to lose about 15 billion cubic metres of water — 27 per cent of annual share — each of the five years that Ethiopia has said it will take to fill the dam. The country's current share already is insufficient.

Egypt also would lose between 30 and 40 per cent of its hydropower generation, he said.

"If I was more of an optimist, I would say it will cause significant damage (to Egypt)," he told The Associated Press. "If I was being pessimistic, it is a catastrophe."

"Potentially catastrophic" is the opinion of Haydar Yousif Hussin, an Italian-based Sudanese hydrologist who has worked on Nile water issues for 35 years. The dam's reservoir "will hold back nearly one and a half times the average annual flow of the Blue Nile" and "drastically affect the downstream nations' agriculture, electricity and water supply," he said in an article published in the South African magazine Infrastructure News.

Given the massive size of the dam, it could lose as much as 3 billion cubic metres of water to evaporation each year, Yousif added.

Mekonnin said the dam construction is at 21 per cent and should be complete by 2015. Ethiopia has said the massive dam, located 60 kilometres from Sudan's border, is being built with a storage capacity for 74 million cubic metres of water and generating power of 6,000 megawatts — 30 per cent more than the electricity produced by Egypt's Aswan Dam, built on the Nile in the 1960s.

But very little other information is available.

"It remains irresponsible for Ethiopia to build Africa's biggest hydropower project, on its most contentious river, with no public access to critical information about the dam's impacts," Yousif wrote. He urged Ethiopian officials to "allow some light to penetrate this secretive development scheme."

Funding unclear

Ethiopia has timed the dam's construction while Egypt is at its weakest. The government announced the project in March 2011, when Egypt's government was overwhelmed by the Arab Spring revolution. The Nile diversion came the day after leaders of the two countries met in Addis Ababa, the Ethiopian capital, on the sidelines of an African Union summit, and days before Ethiopia, Egypt and Sudan were due to issue a technical report on the dam.

Information about the funding of the project is also unclear.

The World Bank and other donors have refused involvement, reportedly because of Egyptian lobbying of countries like the United States, which considers Egypt a key ally and pivotal to security in the region.

The contract for the $4.8 billion project was awarded without competitive bidding to the Italian company Salini Construttori, according to Yousif and other experts.

Ethiopia says it is funding the massive project on its own, urging citizens to buy bonds that earn 5 or 6 per cent interest. Norway's Development Today magazine quoted Kjetil Tronvoll of Oslo's International Law and Policy Institute as saying that government employees are being pressed to donate one month's salary to the dam and, when people protested, they were arrested.

A journalist who wrote an article criticizing the fund-raising methods, Reeyot Alemu, was arrested, tried for terrorism and sentenced to two years' jail, according to the Committee to Protect Journalists.

The issue of the dam also highlights traditional differences between Africa's northern Arabs and the blacks of the south.

That perception must be corrected, Egypt's assistant for foreign affairs, Essam el-Haddad, wrote on Egypt's foreign policy blog.

"Egypt's rejection of the project reinforces a negative stereotype of Egypt that is spreading among the people of Africa ... that this country is the reason for the absence of development and economic progress in African countries because it has acquired, unduly, the largest share of (Nile) water for its development," he wrote. "Egypt seeks to be a real partner in development in Africa."