Set to be the largest hydroelectric scheme in Africa, the Grand Ethiopian Renaissance Dam is expected to boost Addis Ababa’s electricity power supply.
Ethiopia has begun generating electricity from its mega-dam on the Blue Nile, a milestone in the controversial multi-billion dollar project.
Prime Minister Abiy Ahmed described Sunday's development as "the birth of a new era".
"This is a good news for our continent & the downstream countries with whom we aspire to work together," he said on Twitter.
Abiy, accompanied by high-ranking officials, toured the power station and pressed a series of buttons on an electronic screen, a move that officials said initiated production.
The Grand Ethiopian Renaissance Dam (GERD) is set to be the largest hydroelectric scheme in Africa but has been at the centre of a dispute with downstream nations Egypt and Sudan ever since work first began in 2011.
Addis Ababa deems the project essential for the electrification and development of Africa's second most populous country, but Cairo and Khartoum fear it could threaten their access to vital Nile waters.
Abiy dismissed those concerns saying, "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".
‘Resisting external pressure’
The $4.2 billion dam is ultimately expected to produce more than 5,000 megawatts of electricity, more than doubling Ethiopia's current output.
Only one of 13 turbines is currently operational, with an installed capacity of 375 megawatts.
A second will come online within a few months, project manager Kifle Horo said, adding that the dam is currently expected to be fully completed in 2024.
The 145-metre (475-foot) high structure straddles the Blue Nile in the Benishangul-Gumuz region of western Ethiopia, near the border with Sudan.
Egypt and Sudan have long been pushing for a binding deal over the filling and operation of the massive dam, but African Union-sponsored talks have failed to achieve a breakthrough.
William Davison, senior analyst at the International Crisis Group, said the GERD is seen domestically "as a symbol of Ethiopia resisting external pressure".