Pakistan's Executive Committee of the National Economic Council has approved a PKR128.5bn (approximately $1.6bn) plan to reinstate the Karachi Circular Railway, which has been closed since 1997.
The renovation plan includes track dualisation and technology modernisation. The provision of two dedicated tracks along the main lines from Karachi City station to Drigh Road is also under consideration.
The project will be funded by the Japan Bank of International Cooperation, officials have said.
The railway will be owned by Pakistan Railways with a 60% share, Sindh Government with a 25% share and the City District Government of Karachi with a 15% share and operated by the Karachi Urban Transport Corporation.
The Japan International Cooperation Agency and the World Bank have already conducted a study of the line and the line has been approved by the Environmental Protection Agency, officials said.
The country is planning to float tenders for the project.
The nearly four decades-old line was shut down due to losses and is now expected to cater to nearly 70,000 people.