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The three largest countries on the Nile basin – Egypt, Ethiopia, and Sudan – signed an agreement on Tuesday to begin preliminary studies on the potential impact of Ethiopia’s $5 billion Grand Renaissance Dam project on the flow of water in the Nile.

The countries agreed to hire two French engineering firms – BRL Group and Artelia – to handle technical studies for the dam project starting from February.

According to Reuters, the Ethiopian and Egyptian governments have been in dispute over the dam project since it was announced in 2011. Ethiopia is the source of the Blue Nile, which joins the White Nile in Khartoum, Sudan, and then flows to Egypt.

Egypt, which relies on the Nile for 90 percent of the Nile’s water supply, had criticized the project because it could reduce water supplies to its population. But Ethiopia insists that the dam would not disrupt water flow, accusing Egypt of pressuring donor countries and foreign lenders to withhold funding for the 6,000-megawatt dam project.

"We are satisfied with the results of this meeting and look forward to achieving a strategic partnership," said Egyptian Foreign Minister Sameh Shoukry.

Ethiopia’s Grand Renaissance Dam is Africa’s largest hydroelectric scheme, and could transform the east African country into a regional exporter of power. Ethiopia plans to spend $12 billion on harnessing its rivers for hydroelectric power production over the next two decades.

"We see the agreement over these companies as progress and look forward to actualizing the interests of the three countries. We believe the dam will be useful to the three countries," said Ethiopian Foreign Minister Tedros Adhanom.

Chibuike Oguh is Financial Nigeria’s Frontier Markets Analyst