The FDI angle:  

• The Grand Ethiopian Renaissance Dam - or GERD - along the Blue Nile river is set to become Africa's biggest power plant and one of the largest 20 dams in the world.
• The dam is expected to boost energy security in the country, as well as in the region.
• But it has spooked the two Blue Nile downstream countries - Sudan and Egypt - as GERD allows Ethiopia to control much of the Blue Nile's fresh water flowing into the two countries.

Less than half (45%) of Ethiopia’s 120 million people have access to electricity, according to the International Energy Agency. In recent months, even those with access have been facing extreme power shortages. 

To tackle this pervasive electricity insecurity, the Ethiopian government began the construction of the Grand Ethiopian Renaissance Dam (GERD) along the Blue Nile river in 2011. With an installed capacity of 5.15 gigawatts (GW), the GERD will be Africa’s biggest power plant and one of the largest 20 dams in the world. 

Located in the Benishangul-Gumuz region of Ethiopia, just 40km from the Sudanese border, the dam is now 90% completed and operational: it first produced electricity in early 2022. Total costs at completion are estimated at around $5bn, or 3.9% of Ethiopia’s gross domestic product in 2022. 

The dam is expected to boost energy security in the country, as well as in the region. The Ethiopian Electric Power Corporation signed a memorandum of understanding to sell electricity from the GERD at a subsidised rate to neighbouring South Sudan. The company is assessing similar agreements with other African nations such as Kenya and Tanzania. 

The gigantic endeavour comes with an equally gigantic caveat. A reservoir of 74 billion cubic metres that has spooked the two Blue Nile downstream countries: Sudan and Egypt. As a reference, the water reservoir of the Three Gorges Dam in China, the world’s largest hydroelectric plant, has a capacity of 39.3 billion cubic metres. 

On paper, the GERD thus allows Ethiopia to control much of the Blue Nile’s fresh water flowing into Egypt and Sudan. The Nile Basin initiative, an intergovernmental partnership of 10 Nile basin countries, estimated that the historic average of the Blue Nile’s fresh water is 50 billion cubic metres per year. In other words, the dam could contain 1.5 times all the water that flows along the river in a year. 

“Since the early stages of Ethiopia’s dam construction efforts, Egypt and Sudan have expressed their opposition to the project, especially if it proceeds without co-ordination with them. Both countries view Ethiopia’s unilateral decision to construct the dam as provocative,” says Ali Metwally, MENA economist and risk analyst at risk advisory firm Infospectrum.

Downstream impact 

“When it comes to a dam, there is usually a benefit for the upstream and impact for the downstream,” says Essam Heggy, an Egyptian water scientist at Nasa, who is currently researching the environmental impact the dam will have on the Blue Nile. 

Upstream, dams cause a river to flood, creating a reservoir that can be used to harvest hydropower. However, this changes the natural flow of the river downstream because it can hold back sediment and disrupt the flow of water. 

The Blue Nile joins the White Nile in Khartoum, the capital of Sudan, to form the Nile. The Yale School of the Environment estimates that the former makes up 59% of the water that ends up flowing through Egypt. In Sudan, two Blue Nile dams — the Roseires Dam and Sennar Dam — contribute to at least 40% of the country’s hydropower. 

Anything that threatens to reduce the river flows of the Nile and its two main tributaries inevitably becomes a hot potato. 

As climate change causes heatwaves and more frequent droughts, any reduction in Egypt’s water supply will be felt ever more sharply

Ben Hunter

“Egypt’s water supply is projected to reach a level of ‘absolute scarcity’ by 2025 and the GERD is a contributing factor. As climate change causes heatwaves and more frequent droughts, any reduction in Egypt’s water supply will be felt ever more sharply,” says Ben Hunter, Africa analyst at risk intelligence company Verisk Maplecroft. 

Legal complications 

Under the UN Convention on the Uses of Non-navigable International Watercourses, countries are not to use water resources in a way that causes ‘appreciable harm’ to other countries. Unfortunately, none of Egypt, Sudan and Ethiopia are signatories, notes Samuel Pitchford, a solicitor and journalist focusing on water disputes. 

Instead, the Nile is governed by two colonial and two post-colonial agreements. The first is the 1902 British-Ethiopia treaty, which was signed while Egypt was a UK protectorate. Article III of this treaty states that Ethiopia shall not “construct, or allow to be constructed, any work across the Blue Nile … which would arrest the flow of their waters into the Nile except in agreement with [the UK] and the government of the Sudan”.

However, Ethiopia no longer abides by this treaty, on the premise that the other signatory – the UK – has left the continent. Egypt, which was a sovereign state at the time of signing, has no power in enforcing this agreement. However, Sudan, technically a successor of the British state, has argued that the treaty remains binding on Ethiopia.  

Two further treaties were signed between Egypt and Sudan in 1929 and 1959 respectively, dividing the Nile’s water between the two countries with 66% of the water allocated to Egypt and 22% to Sudan. “Attempts to update this with involvement from all Nile basin states have been stymied by Cairo and Khartoum for years,” says Mr Hunter. 

Mr Pitchford adds: “Ethiopia has naturally rejected both treaties as non-binding on itself, being a party to neither treaty.”

More recently, in 1993, Ethiopia and Egypt signed the Ethio-Egypt Accord, which provides a framework for co-operation between the two states, stating that both shall “refrain from engaging in any activity related to the Nile waters that may cause appreciable harm to the interests of the other party”. 

Research and collaboration 

After years of tension, the three states signed the Declaration of Principles in March 2015, outlining the basic principles that the GERD’s construction should adhere to. However, this non-binding agreement took flak because it failed to include key considerations, such as the GERD’s storage capacity, which was increased by Ethiopia in 2020. 

Mr Pitchford notes that these measures have hit a roadblock because “Egypt wants Ethiopia to commit to discharging a minimum volume of water during droughts. Ethiopia will not agree as that would limit its sovereignty. It may want to retain the water itself if there is a drought.”

However, at the Sudan summit in July, the Egyptian and Ethiopian presidents shook hands, agreeing to restart negotiations and find a diplomatic solution to the GERD issue, which will be of benefit to all the Blue Nile basin countries. 

Mr Heggy argues that while collaboration is important, the real solution lies in accepting the science behind dam construction and the Nile. “There is a need for greater research on how the GERD will affect downstream countries,” he says. “If we know what the impact may be, there can be preventative measures taken.”

Egypt has been ramping up measures to more effectively use its water in anticipation of scarcity. “Egypt has implemented a national water resources plan, with the second phase launched in 2017. The plan aims to increase water usage efficiency through various measures, including the reduction of irrigation water waste,” says Mr Metwally. In addition, the country is rapidly constructing more desalination plants to increase its freshwater security. 

With its mammoth capacity for electricity generation, the GERD may be crucial in providing energy to Ethiopia and across Africa. However, its reliance on a shared resource makes collaboration and discourse vital to ensuring that electricity in Ethiopia does not lead to scarcity elsewhere.

This article first appeared in the August/September issue of fDi Intelligence