The project manager of a $4-billion Ethiopian dam was found shot dead in his car on Thursday, police said.

"We have confirmed that engineer Simegnew Bekele was shot dead," Zeinu Jemal, head of Ethiopia's Federal Police Commission, told reporters. "He had a bullet wound behind his right ear," Zeinu said, adding a Colt pistol was found inside the car.

Asked if the gun belonged to the victim, he said: "That has not been confirmed."

Simegnew project-managed the Grand Renaissance Dam that is being built along the Nile river. Talks with Egypt, whose main source of water is the Nile, and Sudan on disagreements over its impact on the river have been deadlocked for years.

A bone of contention for Ethiopia and Egypt is the speed at which the dam's reservoir would be filled, with Cairo fearing the river's flow will be significantly reduced.

Zeinu said police had gathered forensic evidence and were talking to witnesses. "Police are undertaking an investigation as we speak," he said.

Earlier on Thursday, a Reuters photographer observed blood stains along an arm rest inside his car - a Toyota Landcruiser - before an ambulance took away the corpse. State media also reported the death, without disclosing the cause.

Now around half complete, the dam will churn out 6 000 MW of power on completion. It is the centrepiece of Ethiopia's bid to become Africa's biggest power exporter. The country plans to spend some $12 billion on harnessing its rivers for hydropower in the next two decades.

Under a new 2015-2020 development plan, Addis Ababa wants to raise power generation to 17 346 MW from a current capacity of just over 4 300 MW from hydropower, wind and geothermal sources.

In June, the leaders of Ethiopia and Egypt vowed to iron out their differences peacefully. They also agreed to take steps to put into effect an agreement, which includes Sudan, to set up a fund for investing in infrastructure in the three countries.

On Twitter, Fitsum Arega, Ethiopian Prime Minister Abiy Ahmed's chief of staff, said Abiy was "saddened and utterly shocked" to hear of the death of Simegnew.