Nile course change sends shock Wednesday through Egypt’s stock market; Cairo gives grin to Ethiopian envoy

30 May

Posted by The Ethiopia Observatory

EGX30 falls 1.2 percent Wednesday following Ethiopia’s contentious decision to divert course of Blue Nile, raising concerns about move’s impact on Egyptian water security

Egypt stocks tumbled on Wednesday in the wake of Ethiopia’s recent move to begin construction of a major dam on the Blue Nile, one of the Nile River’s two main tributaries, raising fears regarding the move’s potential impact on Egypt.

The main EGX30 index declined by 1.2 percent to reach 5,338 points in a session that saw total daily turnover of some LE339.9 million.

Egypt’s foreign ministry on Wednesday summoned Ethiopian Ambassador Mahmoud Dardir to express its displeasure with Ethiopia’s decision to divert the course of the Blue Nile, one of the Nile River’s two major tributaries, as part of its project to build a series of new dams for electricity production.

Egypt’s broader-based EGX70 index, meanwhile, fell by 0.8 percent for the day.

Commercial International Bank was the only blue-chip share to register gains – 0.03 percent – with foreign investors picking up some LE3.2 million worth of company stock.

Market bellwethers Orascom Construction Industries (OCI) and Orascom Telecom (OT), meanwhile, fell by 2.1 and 0.8 percent.

Property shares Talaat Mostafa Group, Palm Hills and SODIC all slumped on Wednesday as well, falling by 1, 2.6 and 2.4 percent respectively.

Domestic investors ended the trade session as net sellers, offloading some LE8.5 million worth of shares.
 
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EGYPTIAN FOREIGN MINISTRY GIVES GRIN TO ETHIOPIAN AMBASSADOR IN CAIRO

Egyptian Minister of Foreign Affairs, Mohamed Kamel Amr (Photo: Reuters)

Egyptian Minister of Foreign Affairs, Mohamed Kamel Amr (Photo: Reuters)

Egypt’s foreign ministry on Wednesday summoned Ethiopian Ambassador Mahmoud Dardir to express its displeasure with Ethiopia’s construction of a major dam on the Blue Nile.

Head of the ministry’s African affairs committee, Ambassador Ali Hefny, along with other diplomats, met with Dardir Wednesday to convey Egypt’s unhappiness with the move.

Egyptian diplomats further criticised Ethiopia for going ahead with the project without taking into account the recommendations of a technical committee – tasked with studying the issue – consisting of ten specialists, including representatives of Egypt, Sudan and Ethiopia.

In a Tuesday interview with Ahram Online, Egyptian ambassador to Ethiopia Mohamed Idris stated that Egypt was pursuing a “win-win scenario in which the interests of both sides can be served and accommodated.”

Idris added: “We’re expecting Ethiopian officials to make good on their earlier promise to act in a way that would not harm Egyptian interests.”

A report on the possible impact of Ethiopia’s ‘Renaissance Dam’ is expected to be issued later this week by the committee of specialists.

Sources close to the committee say the report will include concerns over the potential impact of the dam on Egypt and Sudan.

It is also expected to refer to worries that cracks could develop in the dam within a few years, eventually leading to serious flooding.

Ethiopia on Tuesday began diverting the course of the Blue Nile, one of the Nile River’s two major tributaries, as part of its project to build a series of new dams for electricity production.

The move, called “historic” by Ethiopian government spokesperson Bereket Simon, has prompted criticism from downstream Egypt and Sudan, since the step could negatively affect both countries’ water quotas.

The Blue Nile provides Egypt with the lion’s share of its annual 55 billion cubic metres of river water.

According to the state-run National Planning Institute, Egypt will need an additional 21 billion cubic metres of water per year by 2050 – on top of its current quota of 55 billion metres – to meet the needs of a projected population of 150 million.
 
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SALAFIST NOUR PARTY FORMS COMMITTEE TO LOOK INTO THE NILE ISSUE

The Nour Party announced on Wednesday that it will form a committee to look into the current issue of Ethiopia’s Nile dam project and its implications for Egypt.

The news comes a day after Ethiopia announced it will begin diverting the course of the Blue Nile, one of the Nile River’s two major tributaries, as part of its project to build a new dam, known as the Renaissance Dam.

The Salafist party’s committee will study the effects of this decision and the agricultural, industrial, economic and social repercussions, Al-Ahram’s Arabic news website reported. It will then present its findings to the heads of the party to determine what steps to take.

Moreover, a delegation will be formed, made up of diplomats, specialists and interested political figures, to visit Ethiopia, in an attempt to assist the government in the current crisis, deputy head of the party’s culture committee, Ahmed Khalil, stated on the Nour Party’s official website.

The committee will include a number of party members, including deputy secretary of the party Magdi Selim; head of the Nour Party block in the Shura Council Abdullah Badran; undersecretary for the agriculture and irrigation committee Ahmed Tawfiq; head of the Shura Council’s African affairs committee Abdelfattah Shaheen; and head of the human rights committee Mohamed El-Azzab.

The majority of the Nile water that reaches Egypt and Sudan originates in the Blue Nile.

The Renaissance Dam has been a source of concern for the Egyptian government, amid sensitivities about any effect on the volume of water that will reach Egypt if the project is completed.

Egypt will need an additional 21 billion cubic metres of water per year by 2050, on top of its current 55 billion metres quota, to meet the water needs of a projected population of 150 million people, according to Egypt’s National Planning Institute.
 
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Rendition of the Grand Renaissance Dam

Rendition of the Grand Renaissance Dam

ETHIOPIAN OFFICIALS DISPEL FEARS OVER DAM’S IMPACT

Ethiopia began diverting a stretch of the Nile on Tuesday to make way for a $4.7 billion hydroelectric dam that is worrying downstream countries dependent on the world’s longest river for water.

The Horn of Africa country has laid out plans to invest more than $12 billion in harnessing the rivers that run through its rugged highlands, to become Africa’s leading power exporter.

Centrepiece to the plan is the Grand Renaissance Dam being built in the Benishangul-Gumuz region bordering Sudan. Now 21 percent complete, it will eventually have a 6,000 megawatt capacity, the government says, equivalent to six nuclear power plants.

“The dam is being built in the middle of the river so you can’t carry out construction work while the river flowed,” said Mihret Debebe, chief executive officer of the state-run Ethiopian Electric Power Corporation, at a ceremony at the site.

“This now enables us to carry out civil engineering work without difficulties. The aim is to divert the river by a few metres and then allow it to flow on its natural course.”

Ethiopia’s ambitions have heightened concerns in Egypt over fears the projects may reduce the river’s flow. Addis Ababa has long complained that Cairo was pressuring donor countries and international lenders to withhold funding.

Ethiopia’s energy minister moved to dispel fears over the dam’s impact.

“The dam’s construction benefits riparian countries, showcases fair and equitable use of the river’s flow and does not cause any harm on any country,” Alemayehu Tegenu said in a speech.

Mohamed Bahaa El-Din, Egypt’s Minister of Water Resources and Irrigation, said Cairo was not opposed to Ethiopia’s development projects as long as they did not harm downstream countries.

“Crises in the distribution and management of water faced in Egypt these days and the complaints of farmers from a lack of water confirms that we cannot let go of a single drop of water from the quantity that comes to us from the Upper Nile,” he said.

A panel of experts from Ethiopia, Egypt and Sudan is set to announce its findings on the impact of the Ethiopian dam on the Nile’s flow in the next two weeks.

Sudanese Minister of Water Resources Osama Abdullah arrived in Cairo on Wednesday for a one-day visit to discuss the dam’s impact with Egyptian officials, state news agency MENA said.

ETHIOPIA DAM WON’T AFFECT NILE WATER SHARE: EGYPT’S PRESIDENT

The Egyptian president’s office announced Tuesday that the ongoing construction work by the Ethiopian government to divert the course of the Blue Nile, one of the Nile River’s two major tributaries, as part of its project to build a new dam, will not affect Egypt’s share of the Nile water negatively.

“Any architectural project on the Nile River requires diverting the course of the water passageways before starting construction. It will not affect Egypt’s share of the Nile water,” said presidential spokesman Omar Amer in a news conference Tuesday.

Ethiopia said on Monday it will begin on Tuesday diverting the course of the Blue Nile, as part of its project to build a new dam.

The Renaissance Dam, which is currently under construction, has been a source of concern for the Egyptian government. A report by a tripartite technical committee, which includes members from Ethiopia, Sudan and Egypt, on the effects of the dam is expected in the next few days.

Egypt will need an additional 21 billion cubic metres of water per year by 2050, on top of its current quota of 55 billion metres, to meet the water needs of a projected population of 150 million people, according to Egypt’s National Planning Institute.

 
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EGYPT PURSUING WIN-WIN SOLUTION WITH ETHIOPIA – EGYPT’S AMBASSADOR

“Ethiopia has repeatedly and publicly affirmed that Egypt’s water interests will not be harmed [by the construction of the Renaissance Dam] and we are following up on this,” Mohamed Idris, Egyptian ambassador in Addis Ababa, told Ahram Online on Tuesday.

Idris was speaking by phone from the Ethiopian capital after Monday’s announcement by Ethiopia that it would begin work on diverting the course of the Blue Nile as part of the Renaissance Dam project.

The dam is already under construction despite requirements under international law that all Nile Basin states must agree before such a project is undertaken.

The Renaissance Dam is expected to require the storage of over 70 billion cubic metres of water from the Blue Nile that provides Egypt with over 80 percent of its annual share of Nile water – with the rest coming from Uganda.

The construction of the dam was effectively initiated some two years ago following the signing of an agreement by most upstream Nile Basin states. Ethiopia will use the dam to generate electricity to meet its expanded development needs, with extra for exports.

“We are pursuing a win-win scenario in which the interests of both sides can be served and accommodated,” Idris said.

The possibility of only mild damage to Egypt’s interests is possible because the water to be stored behind the dam will only be used to generate electricity and not for irrigation.

“There are several factors that should be taken into consideration and will be decided upon by technical experts. We are expecting Ethiopian officials to make good on their promise to act in a way that will not harm Egyptian interests,” Idris said. “It is not impossible,” he added.

A report on the possible impact of the Renaissance Dam is expected to be published this week by a committee of representatives and experts from Ethiopia, Egypt and Sudan.

Sources close to the committee say the report will reveal some concerns over the impact of the dam on Egypt and Sudan. It is also expected to reveal concerns that cracks could develop in the dam within a few years and eventually lead to serious flooding.

Idris said he had not read the report and was not willing to speculate on its content. “We have initiated a new phase of good relations with Ethiopia since the January 25 Revolution. There is new momentum that has seen greater bilateral trade and more Egyptian investment in Ethiopia, in addition to the expansion of cooperation,” he said.

“In a positive atmosphere of mutual trust and cooperation we are certainly capable of moving forward with our joint cooperation, but should the overall atmosphere take a negative turn it is unlikely that we could pursue the improvement in our mutual interests,” Idris stressed.

The construction of the dam is likely to be completed in around three years if Ethiopia manages to keep the funds flowing. So far Ethiopia says it is only using national funds. Cairo has made a point of reminding potential international donors that any aid should be consistent with international regulations that demand the full consent of all Nile Basin states for key Nile projects.

Idris is hopeful that an agreement can be reached while the dam is being constructed so both sides can manage the matter “with consideration for the development interests of both sides.”

He added, “We are in continuous consultation with Ethiopia and this will be upgraded to ensure the matter is given the fullest consideration and fulfills the interests of both nations.”

Idris said the diversion of the Blue Nile is a step in the dam-construction process and the most crucial matter ahead is the pace of water storage and safety considerations.

“At the end of the day we cannot agree to anything that would harm our interests. I think this is clear and legitimate,” he added.

CAIRO KNEW OF PLANNED BLUE NILE DIVERSION IN ADVANCE –EGYPTIAN GOV’T

Cairo was notified in advance about the diversion of the Blue Nile before the move was officially announced by Ethiopia late Monday evening, an informed government official told Ahram Online.

“We had already known this; we were notified and the president knew,” he said.

Ethiopia on Tuesday began diverting the course of the Blue Nile, one of the Nile River’s two major tributaries, as part of a project to build a new dam.

The move, called “historic” by Ethiopian government spokesman Bereket Simon, is likely to anger downstream Egypt and Sudan, both of which fear the move will negatively affect their annual quotas on Nile water.

Ethiopia’s ‘Renaissance Dam’ is one of four dams planned for construction along the Blue Nile, which provides Egypt with the lion’s share of its annual 55 billion cubic metres of Nile water.

On Monday, Ethiopian Foreign Minister Gebre-Christos said the dam, which is currently under construction and will be able to store some 84 million cubic metres of Nile water, would be used exclusively for power generation and would not reduce Egypt’s share of Nile water.

The Egyptian government source said that, during President Mohamed Morsi’s visit to Addis Ababa – which ended Monday evening only hours before the announcement – there had been unsuccessful attempts to convince the Ethiopian side to delay the move.

“There were attempts [to persuade Ethiopia to postpone the move] through several diplomatic channels, both direct and indirect, and during the president’s talks with senior Ethiopian officials,” the source said.

“President Morsi raised the matter, but it was clear Ethiopia is determined to go ahead.”

The source added that Addis Ababa was offering “reassurances” that it would be “sensitive” to Egyptian concerns and would “try to accommodate” Cairo’s demand that it fill the planned dam’s reservoir only gradually, so as to ensure that the effect on Egypt’s annual share of Nile water would not be too abrupt.

The Ethiopian move to redirect the course of the Blue Nile is perceived by Cairo as an indication of Addis Ababa’s determination to follow through with its plans, despite Egypt’s objections that such plans violate international agreements that put Egypt’s annual share of Nile water at 55 billion cubic metres.

Addis Ababa has repeatedly shrugged off these agreements, asserting that they deny all Nile Basin states – apart from Egypt and Sudan – any serious share of river water.

Since 1902, there have been over ten agreements regulating the distribution of Nile water, including a 1959 agreement that specified Egypt’s exact share.

Most of these agreements stipulate that no dams or other irrigation projects should be built on the Nile without the prior notification of all Nile Basin states.

It is a precondition consistent with international law and with regulations adopted by the basin states of other rivers.

In 1999, Egypt agreed to join the other Nile Basin countries in a negotiation process specifically aimed at addressing the demands of the upstream countries.

During the process, Egypt issued two recommendations: firstly, to reduce water wastage, currently estimated at millions of cubic metres (some studies indicate that total wastage is more than Egypt’s entire annual share); and, secondly, to streamline usage of upstream water resources, including rainwater.

In 2010, both Egypt and Sudan (before the latter was split in two) suspended their participation in the talks due to a failure to define the terms of an agreement governing the construction of irrigation projects on the Nile.

The fate of this process remains in limbo, however, with both Cairo and Khartoum insisting on the full consensus of all basin countries before any dams can be built on the river.

The dispute over Nile water began in 2009 with demands made by upstream states, including Ethiopia, to reduce Egypt’s share in line with a new water-sharing treaty already signed by most upstream states.

Egypt is already suffering a water shortage and there are genuine concerns that Ethiopia’s planned Renaissance Dam would aggravate an existing problem that has until now been poorly attended to.

According to Egypt’s National Planning Institute, the country will likely need an additional 21 billion cubic metres of water per year by 2050 – on top of its current 55-billion-metre quota – to meet the water needs of a projected population of 150 million.

A source from the UN Development Programme suggested that Egypt’s annual loss of water – due to outdated irrigation systems and poor sewage maintenance – currently stood at some 10 percent of its official annual share.

“The fact that Egyptian authorities have turned a blind eye to the loss of fertile land is an added problem, as this means that Egypt would need much more water to help with desert land reclamation,” the source said.

Egypt’s concerns go beyond its share of Nile water.

A source close to the three-way consultation mechanism bringing together Egypt, Sudan and Ethiopia to discuss “technical aspects and influences” of Ethiopia’s planned Renaissance Dam speaks of “safety concerns” as well.

“I’m not saying the Renaissance Dam will collapse shortly after its construction, but I’m saying there are concerns that – in a few years – it could develop cracks,” he said.

The three-way consultation, which has been ongoing for over a year, began its sixth session in Addis Ababa two days ago.

It should issue a comprehensive report on the issue by the end of this month or early next month.
 

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SUDAN DENIES CALLING FOR ARAB LEAGUE INTERVENTION IN NILE DAM CRISIS

Sudan denied reports circulated Tuesday that the Sudanese ambassador to Egypt, Kamal Hassan Ali, had called for the Arab League to intervene on the issue of a new dam being constructed by Ethiopia on the Blue Nile.

Ethiopia on Tuesday began diverting the course of the Blue Nile, one of the Nile River’s two major tributaries, as part of its project to build a new dam for electricity production.

The move, called “historic” by Ethiopian government spokesperson Bereket Simon, has prompted criticism from downstream Egypt, since the step could negatively affect the country’s water quota.

A Wednesday statement by the Republic of Sudan’s foreign ministry denied that Ali had mentioned Sudan’s “shock” about Tuesday’s events, as previously reported.

Moreover, the statement further stated that negotiations were ongoing in an attempt to solve the crisis.

The Blue Nile provides Egypt with the lion’s share of its annual 55 billion cubic metres of river water.

According to the state-run National Planning Institute, Egypt will need an additional 21 billion cubic metres of water per year by 2050 – on top of its current quota of 55 billion metres – to meet the needs of a projected population of 150 million.

 

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SUDAN, EGYPT MAY CALL ON ARAB LEAGUE OVER NILE DAM

Sudan's ambassador to Egypt Kamal Hassan (Photo: Ahram)

Sudan’s ambassador to Egypt Kamal Hassan (Photo: Ahram)

Sudan’s ambassador to Egypt, Kamal Hassan, stated on Tuesday that Egypt and Sudan may call for intervention by the Arab League in response to the diversion of the Blue Nile on Tuesday at the construction site of a new Ethiopian dam project.

“There are continuous calls between the Egyptian and the Sudanese authorities to look into Ethiopia’s sudden and shocking decision,” Hassan told Turkish news agency Anadolu.

He added that the tripartite committee looking into the dam project, which includes members from Egypt, Sudan and Ethiopia, is still in place and negotiations will remain ongoing. A report is expected from the committee in the next few days.

An anonymous source within Egypt’s foreign ministry told Al-Ahram’s Arabic news website on Tuesday that Egypt is “shocked and surprised” by the step taken by Ethiopia.

The source further stressed that Egypt’s irrigation minister would need to account for the details of recent negotiations on the issue, especially as the incident has taken place only a day after President Mohamed Morsi’s visit to Ethiopia for an African Union summit.

However, Egypt’s ambassador to Ethiopia, Mohamed Idris, stated that the decision to divert the Blue Nile was neither a recent decision nor a surprise. He further clarified that Egypt would continue to receive its full quota of 55 billion cubic metres of Nile water regardless of the work on the dam.

Ethiopia on announced on Monday it would begin on Tuesday to divert the course of the Blue Nile, one of the Nile River’s two major tributaries, as part of its project to build a new dam.

The majority of the Nile water that reaches Egypt and Sudan orginates in the Blue Nile.

The Renaissance Dam has been a source of concern for the Egyptian government, amid sensitivities about any effect on the volume of water that will reach Egypt if the project is completed.

The dam is one of four hydro-electric power projects planned to be constructed in Ethiopia.

Egypt will need an additional 21 billion cubic metres of water per year by 2050, on top of its current quota of 55 billion metres, to meet the water needs of a projected population of 150 million people, according to Egypt’s National Planning Institute.

Source: Ahram Online
 

*Updated with materials covering all angles

 

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