Grand Ethiopian Renaissance Dam
Ethiopia announced in April 2011 that it intends to build four large dams on the Nile, including one of the largest in the world, the Grand Ethiopian Renaissance Dam (formerly known as Project X or the Grand Millennium Dam). This huge dam will flood 1,680 square kilometers of forest in northwest Ethiopia, near the Sudan border, and create a reservoir that is nearly twice as large as Lake Tana, Ethiopia’s largest natural lake. Approximately 20,000 people will be resettled for the project. The US$5 billion scheme is out of scale for such a poor country; the current cost estimate equals the country’s entire annual budget. The costly project is monopolizing government funding for the energy sector, leaving many worthy projects that would directly address the nation's high energy poverty underfunded.
The project’s launch came in the midst of the Egyptian revolution, which some observers believe was intended to take advantage of the more powerful nation’s confused political state at a time when the issue of who controls the Nile is heating up. Egypt has long held the majority rights to the Nile – a situation that especially angers Ethiopia, which is the source of 85% of the river’s waters. While there are no known studies about the dam’s impacts on the river’s flow, filling such a huge reservoir (it will hold up to 67 billion cubic meters of water, and could take up to seven years to reach capacity) will certainly impact Egypt, which relies almost totally on the Nile for its water supply. Development Today magazine reports that the Nile flow into Egypt could be cut by 25% during the filling period. Many fear the project could set off a water war in the region, and indeed, in mid-2013, tensions flared dramatically. Climate change could increase the project’s many risks.
The potential for conflict is probably the main reason international funders have shown no interest in supporting the project. The government says it will fund the dam itself: it has devised a scheme to sell bonds for the project , is raising taxes, and is encouraging Ethiopians to support the dam with their paychecks. Ethiopia is the world’s second biggest recipient of foreign aid, after Afghanistan.
The dam’s construction contract was given (without competitive bidding) to Italy’s Salini, which is also building the controversial Gibe III Dam on Ethiopia’s Omo River. China may pay for the project turbines, should it ever make it to that stage. The project also stands to benefit from a grid extension funded by the World Bank, which is part of the East Africa Power Pool.