Kenya and Ethiopia have started talks on Nairobi’s plans to buy electricity from the $ 4.5 billion Grand Ethiopian Renaissance Dam (GERD) that began generating power on Sunday. This is according to Ethiopia’s ambassador to Kenya, Meles Alem.

Meles wrote on his Facebook page that power exports to Kenya are part of Ethiopia's “Economic diplomacy which is at the centre of the country's foreign policy”.

The Nairobi meeting came a day after the Horn of Africa nation announced that its controversial dam on the Blue Nile river had begun generating electricity.

Earlier this month, Kenya reached a new agreement with Ethiopia to import hydro-processed cheap power.

The arrangement was reached after an Ethiopian delegation, led by Ethiopia’s state minister for finance, Eyob Tekalign, visited Nairobi on February 2-4.

The neighbours had deliberated on previously signed power trade agreements and deals on the interconnection of power systems in light of progress made on each side.

A statement from Ethiopia’s ministry of foreign affairs said the new deal made in Nairobi intends to "realise the aspirations of both countries' respective people for regional economic integration and sustainable development".

During a February 4 meeting with Kenya’s Cabinet Secretary for Energy, Dr Monica Juma, Eyob said the close relationship between Kenya and Ethiopia would help spur economic growth.

He said the two countries were nearing the conclusion of the interconnector, and they needed to review the status of the project.

"It was necessary to ensure that Ethiopia and Kenya do everything humanly possible to fulfill the dreams and aspirations of both countries to see the entire region connected," he said.

In her remarks during the meeting, Dr Juma said "the value of the interconnection of our power systems is key to powering our aspiration for fast growth".

Both ministers reiterated that the benefits of the interconnection project would go beyond Ethiopia and Kenya by creating a pathway and model for sister nations across the continent. Both parties said they were committed to the project.

The GERD project, in the western Benishangul-Gumuz region, began in 2011. It is 30km from the Sudanese border and has long been a source of contention between Ethiopia, Egypt and Sudan.

Ethiopia’s Prime Minister Abiy Ahmed on Sunday officially inaugurated electricity production from the massive power plant.

Sudan and Egypt see the dam as a threat to their water security due to their high dependence on the resources of the Nile river.

The two downstream countries fear that GERD, what would be Africa's largest dam, could eventually reduce their water share from the river.

But Ethiopia insists that the dam is key to its development and electrification, to light up the homes of 60 per cent of its people who lack access to electricity.

At the inauguration ceremony, PM Abiy assured downstream countries that Ethiopia never intended to harm their interests.

"Ethiopia's main interest is to bring light to 60 percent of the population who (are) suffering in darkness, to save the labour of our mothers who (carry) wood on their backs in order to get energy," he said.

"As you can see, this water will generate energy while flowing as it previously flowed to Sudan and Egypt, unlike the rumours that say the Ethiopian people and government are damming the water to starve Egypt and Sudan."

The 145-metre-high dam started generating 375 megawatts of electricity from one of its turbines on Sunday.

Upon completion, GERD is expected to produce more than 5,000 megawatts of electricity, more than doubling the country's power output.

Ethiopia, Africa's second most populous nation, intends to generate about $1 billion in annual revenue from electricity exports to neighbouring countries and beyond.