Croatian infrastructure manager HŽ Infrastruktura and a local consortium of DIV, Dalekovod, and Zagreb Montaža have agreed to build a second track on Dugo Selo-Križevci rail section, as well as line reconstruction.
Work is scheduled this month and is expected to be completed by February 2020.
An inspection contract was signed with a consortium including Croatian companies SGS Adriatica and Investinženjering.
Modernisation of the 38km line will cost HRK1.25bn (€165m), with 85% to be co-financed by the European Union (EU).
Croatia’s First Deputy Prime Minister Tomislav Karamarko said: "Croatia is paying contributions into European funds, but is getting practically nothing out of them.
"We are making it hard for ourselves and the question is how many good projects have fallen through because of inadequate laws, such as the Public Procurement Act.
"In a situation when every job counts and when people are leaving Croatia and companies are going bankrupt, investments like this are praiseworthy."
Work will include reconstruction of existing stations Dugo Selo, Vrbovec, and Krizevci and pertaining stops, construction of a new station in Gradec and grade-separated crossings, as well as removal of level crossings.
It will also involve upgrading fixed electric traction installations, and modernisation of signalling, interlocking, and telecommunication equipment.
Croatia’s Minister of Maritime Affairs, Transport and Infrastructure Oleg Butkovic said: "This year there will be more major railway infrastructure projects, such as those along the sections Zabok-Sveti Ivan Zabno and Vinkovci-Vukovar, as well as a tender for the Peljesac bridge."