(Reuters) - Sudan launched a major dam project on Tuesday to boost power supply and agricultural irrigation, a plan officials hope will foster farmland exports and attract more Gulf investment to the African country as it battles an economic crisis.
Faced with the loss of most of its oil reserves with South Sudan's secession in 2011, Sudan plans to increase exports of agricultural goods, such as wheat, fruits, oil seeds and gum arabic. Oil was the primary source of income for the country's budget as well as dollars needed to fund imports.
A Chinese firm, paid by Gulf donors, heightened and expanded the Roseiris dam on the Blue Nile near the southeastern border with Ethiopia for an estimated $441.5 million over four years.
In one of the biggest development projects in the country in recent years, the project added 10 meters in height and expanded it to 25 kilometers from 13 kilometers in length, helping increase storage capacity to 7.4 billion cubic meters and allowing more power generation.
Officials said the dam's power supply will now rise by 50 percent to 1,800 megawatts, feeding power to several Sudanese states - a relief for ordinary people in a country with frequent outages, even in the capital Khartoum.
The dam will also boost power supply at Sudan's second largest dam called Merowe north of Khartoum, as it benefits from higher Nile water levels, first engineer Khidir Qassim as-Said told Reuters.
The expanded Roseiris dam will also provide irrigation for 2 million feddans (acres or hectares) of new farmland in several states which will boost agricultural production, according to Industry Minister Abdul-Wahab Mohammed Osman.
An extra 3 million feddan of existing farmland will now get irrigation for the whole year, not just during the rainy season, he said. A fishery factory is also planned at the dam.
Firms from Gulf countries such as Saudi Arabia and Kuwait have unveiled plans to boost investment in Sudanese farmland, which is prized for its fertile soil.
But many projects such as expanding the production of gum arabic, a stabilizer in fizzy drinks, have been hampered by a lack of rain or irrigation. Analysts also blame mismanagement and corruption for the failure of projects.
Gulf donors vowed more support for Sudan during the expanded dam's opening ceremony in order to develop its agricultural sector and strengthen ties with Arab oil producers.
"Kuwait will give more support to Sudan," Abdelwahab Ahmed al-Badr of Kuwait's state development fund, told the crowd.
Sudanese officials also hope the heightened Roseiris dam will improve development in Blue Nile state, one of the poorest regions where the army is fighting rebels complaining of marginalization. The local economy has been hit hard by the violence which began in September 2011.
"The sons of Blue Nile state will be the first to benefit from the dam," President Omar Hassan al-Bashir told the ceremony after he opened the dam's gates.
Though the dam, near the state capital of Damazin, is far away from the border region to South Sudan, where fighting is concentrated, authorities took no chances with security.
Hundreds of soldiers lined the streets from the dam to the airport where the government had flown in hundreds of diplomats, journalists, officials and executives to showcase the project.
Military helicopters also circled over the dam during the ceremony.
Authorities relocated 22,000 people to make way for the dam, replacing their old villages with new settlements, according to the government. (Reporting by Ulf Laessing, Khartoum newsroom; editing by Gary Crosse)