* Graphic: tmsnrt.rs/32gcZBW
Nov 6 (Reuters) - Ethiopia is building a giant dam on the Blue Nile, close to its border with Sudan.
Ethiopia says the hydropower project is crucial to its economic development. Egypt is worried the dam will affect flow of the Nile, its main source of fresh water.
The $4 billion Grand Ethiopian Renaissance Dam (GERD) was announced in early 2011, as Egypt was in political upheaval following a popular uprising that toppled former President Hosni Mubarak.
The dam is the centrepiece of Ethiopia’s bid to become Africa’s biggest power exporter, with a projected capacity of more than 6,000 megawatts.
Ethiopia has said it will start filling the reservoir behind the dam in 2020, though construction has been hit by delays.
The first stage of the filling process is expected to take two years and bring the water level in the reservoir to 595 metres out of an eventual 632 metres.
The Nile Basin river system flows through 11 countries. The Blue Nile and White Nile merge in Sudan before flowing into Egypt and towards the Mediterranean.
Egypt currently bases its share of the river’s waters on a 1959 deal that gave it 55.5 billion cubic metres water annually, and Sudan 18.5 bcm.
Other countries were not given allocations at that time. Ethiopia was not party to the agreement and does not recognise it.
Egypt, which has a rapidly growing population nearing 100 million, relies on the Nile for around 90% of its fresh water.
Even without taking the dam into account, the largely desert country is short of water. It imports about half its food products and recycles about 25 bcm of water annually.
Egypt accuses Ethiopia of not factoring in the risk of drought conditions such as those that affected the Nile Basin in the late 1970s and early 1980s.
While acknowledging such a scenario is unlikely, Egypt says it could lose more than one million jobs and $1.8 billion in economic production annually.
It therefore wants the first, two-year stage of the filling process to be extendable, and for Ethiopia to guarantee it 40 bcm per year after the first stage is completed.
Ethiopia, with a population of more than 100 million people, accuses Egypt of trying to maintain a colonial-era grip over the Nile’s waters.
Addis Ababa says Cairo is trying to hold the project hostage by imposing rules over the filling and operation of the dam.
It says it is taking the interests of Egypt and Sudan - the other downstream nation - into account, and that Egypt’s requirement of a guaranteed 40 bcm is unrealistic.
It also says that while it could fill the reservoir in two to three years, it made a concession by proposing a four to seven year process.
Ethiopia has repeatedly rejected Egypt’s suggestion of a fourth party mediator, saying Cairo is trying to sidestep three-way discussions.
Both sides have accused each other of delaying negotiations, which resumed in Cairo and Khartoum in September and October, before stalling again.
After Egyptian President Abdel Fattah al-Sisi met Ethiopian Prime Minister Abiy Ahmed on the sidelines of a summit in Russia in October, the two sides agreed to restart technical talks.
Egypt has enthusiastically accepted an invitation from the U.S. to separate talks in Washington.
Writing by Aidan Lewis; Editing by Andrew Heavens