Ethiopia has awarded Italys Salini Costruttori a $4.8-billion contract for the construction of Africas biggest dam on the Nile, in Ethiopia, despite stiff opposition to the project from both Egypt and Sudan.

Image courtesy Ethiopian Electric Power Corporation
The Grand Millenium dam will be 145 meters high and 1,800 meters long, with powerhouses on either side of the spillway.

Opposition could make financing the project difficult, officials say.

The 5,250-MW-capacity hydropower dam, the Grand Millennium, has raised tension between Ethiopia and Egypt, with Egypt claiming the project will have a negative impact on the Nile River and its economy. The North African nation relies on the river for 95% of its water.

Design details by the projects owner, state-owned Ethiopian Electric Power Corp., show that when finished the dam will be 145 meters high and 1,800 meter long, with two powerhouses on either side of the spillway. One powerhouse will contain 10, 350-MW Francis turbine generators, while the other will contain five.

Salini will also construct a 5-km-long, 50-m-high reservoir with a capacity of 63 billion cubic meters of water. International Rivers, an NGO that protects rivers and the rights of river-dependent communities, says that amount is equivalent to the annual flow of the Nile at the Sudanese-Egyptian border.

Ethiopian Prime Minister Meles Zenawi insists that benefits accrued from the dam will by no means be restricted to Ethiopia but will clearly extend to all neighboring states, and particularly to the downstream Nile Basin countries, to Sudan and Egypt.

He adds: Its importance is readily apparent when we see that this dam alone will provide for between 65% and 87% of the entire power supply we expect to generate over the period of the plan.

The prime minister is now accusing both Egypt and Sudan of undercutting Ethiopia's efforts to woo investors to finance the project. We have, in fact, been forced to rely on our own savings alone to cover the expense, he says.

Ethiopia intends to raise its taxes on certain goods and services, in addition to launching treasury bonds pegged at 5% interest, to raise money for construction of the Grand Millennium Dam. It is sited 700 km from the capital, Addis Ababa. News reports in Ethiopia indicate that some Chinese banks have offered to finance acquisition of turbines to run the dams electrical equipment for about $1.8 billion.

The plant will have a generating capacity equal to six middle-size nuclear reactors, says Pietro Salini, managing director of Salini Costruttor. Its annual production, at the rate of 5 euro/cents per KWh, will be around 770 millions euros per year.

If this amount of energy would have been marketed in Europe,  he adds, the costs of the plant would be written off in about one year.