Ethiopia will Continue to Build Dam, but could be forced to slow the pace

Ethiopia will push ahead with building Africa’s largest dam, but could eventually be forced to temper its plans.

As its name suggests, the Grand Ethiopian Renaissance Dam is a highly ambitious project. By 2018 it is due to be generating enough electricity to supply millions of homes, while regional power sales will bring in valuable revenues and boost Ethiopia’s influence. But the dam is controversial.

In early October Bloomberg reported that a panel of experts, including two each from Egypt, Ethiopia and Sudan, and four international specialists, think the dam’s design may be structurally flawed. According to the news agency the group, in a report submitted in June, also called for further studies on the project’s impact on countries downstream. But construction of the dam, with a 63bn-cu-metre reservoir and hydropower capacity of 6,000 mw, is already underway.

Among the dam’s fiercest critics is Egypt. Grand Renaissance challenges Cairo’s military and economic dominance of the Nile. A treaty signed in 1929, when Egypt was a British colony, awards it the power to veto upstream developments. After independence, Egypt agreed in 1959 to share the Nile’s water with Sudan, claiming 75% of the annual flow (or 55.5bn cu metres) for itself. There is now growing pressure to share these water resources: six riparian states, including Ethiopia, have signed the Nile River Basin Co-operative Framework, aimed at broadening access to the river. But Egypt refuses to join (so too do Sudan and South Sudan, though they publicly support the Grand Renaissance project).

While Egypt has been distracted by political strife since its revolution in January 2011, however, Ethiopia has pressed on with building the dam. Development of Grand Renaissance was announced in March 2011, and in May this year Ethiopia diverted a stretch of the Blue Nile to make way for engineering work.

Water losses and bloodshed

Tensions between Ethiopia and Egypt nonetheless lurk just below the surface. In arid Egypt, water is an emotive and politicised subject. Control of the Nile is viewed as essential for food and national security, not to mention the livelihoods of millions of farmers.


Ethiopia’s Blue Nile, on which the Grand Renaissance Dam will sit (see map), contributes 54bn cu metres, or more than half the flow of the Nile and nearly equal to Egypt’s claimed share. Ethiopia insists the dam will not impact Egyptian water supplies, as it is designed to generate power rather than to be used for irrigation. But Egypt worries about the effects of impounding water during the filling of the reservoir, and potential losses due to evaporation.

Evaporation losses at Egypt’s Lake Nasser behind the Aswan High Dam imply the structure has depleted Nile water supplies by 10-13bn cu metres/year, according to some studies*. A comparable loss of, say, 10bn cu metres/year at Grand Renaissance would erode Egypt’s portion of the Nile’s water by nearly one-fifth. Egypt also has reason to fret that the mega-dam is merely the first of many losses from upstream reservoirs: Ethiopia plans more dams, for both hydroelectric and irrigation purposes.

As Ethiopia began altering the course of the Blue Nile this year, Egypt stepped up its rhetoric. In June Mohammad Morsi, Egypt’s subsequently deposed president, issued an ominous warning: “If a single drop of the Nile is lost, our blood will be the alternative. We are not warmongers, but we will never allow anyone to threaten our security.” Following Mr Morsi’s ousting, just four days after the interim government took office in July its foreign minister, Nabil Fahmy, promised it would “take action to guarantee the water security of Egypt and preserve our rights in the waters of the Nile”. Verbal support for the anti-dam cause has also been lent by Saudi Arabia: a senior Saudi official even asserted in February that Sudan’s capital, Khartoum, would be submerged if the dam gave way.

Ethiopia: powerful position?

This is mostly bluster. It serves Egypt’s leaders to divert attention from their domestic difficulties, but military action by Egypt would draw international condemnation and outright war would be impossibly costly. For the most part, Egyptian rhetoric is probably intended to push for concessions on further dam-building, rather than being targeted at halting construction.

Undeniably, the new dam puts Ethiopia in a more powerful position in Nile basin politics; it is highly unlikely to walk away from construction, whatever Egypt’s objections. Yet Ethiopia, focussed on economic development, will not want tensions to spark military confrontation with countries downstream.

Should Ethiopia need to soothe regional fears in the future, especially once Egypt emerges from its current disarray, it has options. One is to be more open about the dam’s possible impacts and Ethiopia’s larger ambitions for hydropower and irrigation: allowing a group of international experts to make (outspoken) recommendations was a good start. Slowing the filling of the reservoir from the expected five-to-seven years to 15 or 20 years would be another.

Admittedly, this step would tarnish the dam’s commercial attractiveness, and Ethiopia will not rush to take it. Nonetheless, it could be unavoidable. For one thing, rainfall in the Blue Nile Basin varies greatly from year to year, making it hard to predict how quickly the reservoir will fill up. An even bigger brake on progress is likely to be Ethiopia’s difficulty finding funds for a project expected to cost roughly US$4-5bn.

Given the lack of basin-wide approval, traditional donors like the World Bank have shunned Grand Renaissance. Chinese banks are supplying around US$1bn in loans for electrical transmission lines linking the dam to the capital, Addis Ababa. (A visit to China in June by Ethiopia’s prime minister, Hailemariam Desalegn, may have been aimed partly at securing further funding.) But this still leaves Ethiopia needing to raise US$3bn or more in donations and government bonds. By May 2013, the government had garnered only Birr5bn (US$265m) according to some sources, though around one-fifth of construction on the project had been finished (by July one-quarter was reportedly complete). This, despite the fact that commercial banks are obliged to purchase bonds equal to 27% of their loans each month.

Unsurprisingly, doubts about the sustainability of domestic financing arrangements are rife: the IMF has expressed concerns Grand Renaissance is sucking in funds needed elsewhere in the economy. For now, Ethiopia will push forward with construction as quickly as possible. Eventually, though, it could be forced to slow the pace.