By Helen Nyambura-Mwaura

NAIROBI, March 28 (Reuters) - African countries forming the Nile Basin have agreed to set up a commission governing the river's use, although a few sticking points remain, Kenya's water minister said on Wednesday.

The 6,695 km (4,160 mile) river has been a source of conflict for decades between the impoverished nations in its catchment area and Arab power Egypt, for which it is a lifeline.

"We have agreed on most of the things on the Nile Basin Cooperative Framework. We will be establishing a commission which will be able to regulate the use of the waters of the Nile," Kenyan Water Minister Mutua Katuku told journalists.

"If you are doing a major project within the Nile, you must inform the partners and if anyone has any problem with the project you want to initiate, they can raise it with the commission then the issue will be resolved."

Katuku said the 10 Nile Basin countries were yet to decide on the definitions of some contentious terms, like the meaning of water security, but he said he expected the cooperative framework would be ready in a month's time.

Under a 1929 pact between Egypt and Britain, acting on behalf of its then east African colonies, downstream Egypt can veto use of water higher up that it feels threatens levels.

This agreement has generated resentment and predictions of future wars over the water of one of the world's biggest rivers.

The commission will replace the Nile Basin Initiative formed in 1999 by Burundi, Democratic Republic of Congo, Egypt, Ethiopia, Kenya, Rwanda, Sudan, Tanzania, Uganda and Eritrea.

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