The plant, located in central North Niger State, is expected to be completed in 2017 and is being constructed by China-based consortium of Sinohydro Corporation Ltd and Chinese National Electric Engineering Co (CNEEC).
Both Chinese firms signed the Engineering procurement construction (EPC) contract with the federal ministry of power to complete the project by the end of 2017, Xinhua reported.
President Goodluck Jonathan said at the ceremony that the hydro dam project when constructed would generate 700 megawatts of electricity for the country.
The Zungeru Hydro Electricity Power Project was conceived in 1982, but due to constraints of funds the construction work could not commence.
The president said the $1.293bln power plant would be the largest power plant to be built by this administration.
The project when completed would open new frontiers to drive the socioeconomic transformation of the entire country to another level.
The government has been pursuing a strategy to develop hydro- power projects to meet the desperate demand for electricity.
The Nigerian government approved the project in 2012 in order to obtain more electricity, help maintain appropriate power price and promote economic growth and development of the country.