From the information that's available, it doesn't seem to matter what sort of irrigation system was constructed, it was all about the amount of water that was to be used. Under the newest agreement, the Egyptians lay claim to 75% of water from the entire Nile system. Every other nation accessing the Nile has to share the remaining 25%.
During the Sadat era, a nation building a damn on the upper reaches of the Nile would have been considered an act of war by the Egyptian government.
In light of that, I think it could be a case of the Egyptians threatening to destroy any damns/irrigation systems and/or the ability of the building nation to construct more. It's a seriously more difficult task than what the Egyptians could accomplish but when you consider that Egypt can not exist without the Nile (90% of their water is from the Nile), they get pretty hot-headed about it (and thus lose their common sense).
In reality, I believe they would have to rely on bullying to force the other country to back down because their own military forces would not necessarily be capable of traversing Sudan or Ethiopia unopposed to attack Kenya. Air or naval attack on Kenya is the most easily achieved it would seem but after the events of the Twilight War, Egypt might have a better chance of a land attack.
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