* Claims Egypt is blocking dam funding
* Ethiopia says resolve at "point of no return"
* Analysts fear world's first war over water
By Barry Malone
ADDIS ABABA, March 30 Ethiopia on Wednesday said it planned to build a huge dam on the Nile despite a long-running row with Egypt over use of the river and concern the dispute may spark a war.
The nine countries through which the river passes have for more than a decade been locked in often bitter talks to renegotiate colonial-era treaties that gave Egypt and Sudan the lion's share of the river's waters.
However, six of the nine upstream countries -- Ethiopia, Kenya, Uganda, Rwanda, Tanzania and Burundi -- have signed a new deal stripping Egypt of its veto and agreeing to renegotiate how much water each country is entitled to.
"The Great Nile dam construction is scheduled to commence presently near the Ethio-Sudan border," Water and Energy Minister Alemayehu Tegenu told a news conference. "From this dam alone, Ethiopia expects to generate 5,250MW."
The Horn of Africa nation aims to produce 15,000 megawatts (MW) of power within 10 years, part of a plan to spend $12 billion over 25 years to improve the country's power-generating capability.
Alemayehu said Ethiopia would be forced to finance the $4.78 billion dam from its own coffers and from the sale of government bonds because Egypt was pressuring donor countries and international lenders not to fund its dam projects.
POINT OF NO RETURN
"Those bent on deterring the development of the Nile have not yet changed their obstructionist ways. Alas, Ethiopia's resolve has now reached a point of no return," Alemayehu said.
He said tenders for consultancy contracts would soon be open to international bidders and that Ethiopian engineers would start work soon on the dam, expected to take 44 months to complete.
In November, Ethiopian Prime Minister Meles Zenawi told Reuters that Egypt was backing rebel groups in his country because of the Nile dispute and that if it went to war with upstream countries over the river it would lose.
Egypt says it will ignore the new deal signed by upstream states, even though it is now legally binding with six signatures.
Analysts say that the ousting of Egypt's President Hosni Mubarak and the impending secession of South Sudan have strengthened the case of the upstream nations.
Democratic Republic of Congo (DRC) has not signed the deal and, when South Sudan becomes independent in July, there will be ten Nile countries. Analysts expect South Sudan and DRC to support the new agreement.
Tegenu said the Ethiopian government had commissioned an independent survey that proved the new dam would benefit Egypt and Sudan by decreasing siltation in their irrigation projects and by reducing water wastage.
Under the original pact Egypt, which faces possible water shortages by 2017, is entitled to 55.5 billion cubic metres a year from the Nile's total flow of around 84 billion cubic metres. (Editing by Richard Lough)