* Ethiopian minister says dam could also benefit Egypt

* Dismisses war fears, says not a national security issue

By Barry Malone

ADDIS ABABA, April 18 (Reuters) - Ethiopia did not inform Egypt it planned to build a huge dam on the Nile and the two countries have not discussed the issue despite fears a dispute over the river could spark war, Ethiopia's water minister said.

Work on the 5,250 megawatt (MW) Renaissance Dam - which will be one of the world's ten biggest -- began this month with Italy's Salini Costruttori overseeing a project with a $4.78 billion cost Ethiopia plans to fund itself.

"No. They found out from the media," Alemayehu Tegenu told Reuters in an interview on Monday when asked if Ethiopia had officially informed Egypt it was building its first dam on the Nile -- something Egypt has always opposed.

The nine countries through which the Nile flows have for more than 10 years been locked in bitter talks to renegotiate colonial-era treaties that gave Egypt the lion's share of the river's waters and veto power over upstream dam projects.

Tensions rose last month when Burundi joined five other countries -- Ethiopia, Kenya, Uganda, Rwanda, Tanzania -- and signed a new deal stripping Egypt of its veto and agreeing to renegotiate how much water each country is entitled to.

Egypt has said it will not recognise the new agreement.

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.

But Alemayehu dismissed analyst fears that war could erupt.

"It is not (a national security issue) and it will not be," he said. "What we plan in this country does not impact on Egypt in a negative way."

He said Egypt had yet to officially discuss the dam with Ethiopia. "I have not received any official objection from the Egyptian side," Alemayehu said.

"If Egypt continues with the old mentality, they may not support this dam. If they change their mind and follow a win-win approach, I think they will."

REQUEST TO VISIT

Alemayehu 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.

Ethiopian Foreign Ministry spokesman, Dina Mufti, told Reuters that Egypt's new Prime Minister, Essam Sharaf, had asked to lead a delegation to Ethiopia.

Alemayehu said Ethiopia would not agree to an Egyptian request to see plans for the dam unless Egypt joined the six countries that had signed the new deal.

Ethiopia says it will be forced to finance the 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.

Ethiopia aims to produce 15,000MW of power within 10 years as part of a plan to spend $12 billion over 25 years to overcome chronic power shortages and export to other energy-starved African countries.

Under the original Nile pact Egypt, facing 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. Some 86 percent of the waters originate in Ethiopia.

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