The cabinet on Tuesday approved construction of the 82-billion-baht Orange Line electric train route linking the Thailand Cultural Centre to Min Buri district in eastern Bangkok.
Bidding is expected to be completed in June.
Speaking after the cabinet meeting, Transport Minister Arkhom Termpittayapaisith said the cabinet has given the Mass Rapid Transit Authority of Thailand (MRTA) the go-ahead to build the proposed 21.2-kilometre Orange Line at a cost of 82.9 billion baht.
Of this amount, some 76.63 billion baht is set aside for construction costs while 2.78 billion baht is earmarked for consulting fees for the project and about 3.48 billion baht is reserved for contingency costs, Mr Arkhom said.
He said the cabinet has instructed the MRTA to call for bids to find contractors by June so construction can begin this year.
The Orange Line was originally to run from Taling Chan, west of the Chao Phraya, but Cabinet has retained only the second from the Thailand Cultural Centre to Min Buri district in the far east of Bangkok.
The MRTA has lowered the construction cost by about 2.57 billion baht from an earlier estimate of 85.48 billion baht after it agreed to use more domestically produced materials and equipment in the construction.
About 94% of materials and equipment will be locally sourced while the rest will be imported such as elevators, Mr Arkhom said. He added that on Dec 8 last year, the cabinet approved a budget of 9.62 billion baht for land expropriation. This brings the total cost of the project to 92.53 billion baht, he said.
The 21.2-kilometre Orange Line will feature a 12.2-km subway with 10 stations and a 9-km elevated railway with seven stations.
The Orange Line is one of several transport infrastructure projects currently under way in the capital being pushed by the government to ease heavy traffic as well as to stimulate economic growth.
The MRTA will also consider ways to further lower project costs as the project budget approved by the cabinet is only a general framework, Mr Arkhom said.
The minister added that the cabinet also instructed the Finance Ministry to seek loans to finance the project, and for the Budget Bureau to ensure the MRTA has sufficient annual funding to operate the rail construction project.