The North African country is constructing "the largest wastewater treatment and desalination plant", President Abdel Fattah al-Sisi said live on state television.
"We are only doing what we need to do so we can solve a potential problem," he added, speaking during the inauguration of infrastructure and housing projects.
While Sisi did not elaborate, Egypt fears its water supply will be affected by Ethiopia's Grand Renaissance Dam being built on the Blue Nile.
Cairo argues that the treaties grant it 87 per cent of the Nile's flow, as well as the power to veto upstream projects.
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The Blue and the White Nile tributaries converge in Sudan's capital Khartoum and from there run north through Egypt to the Mediterranean.
"We will not allow a water problem to materialise in Egypt. Water must be secured for everyone," Sisi said today.
He did not give further details about the size of the Egyptian water plant or its planned output.
Foreign Minister Sameh Shoukry visited Addis Ababa in December for discussions on the controversial Ethiopian dam.
It is designed to feed a hydroelectric project that would produce 6,000 megawatts of power -- the equivalent of six nuclear-powered plants.
Ethiopia began building the dam in 2012 and initially expected to commission it in 2017.
Ethiopian media reports say that only about 60 per cent of the construction has taken place.
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