Egypt has agreed a $1.2 billion deal with the Export-Import Bank of China (EximBank) to finance a light rail system from an industrial city on the outskirts of Cairo to a new capital it is building, the transportation minister said.

The loan has a 1.8 percent interest rate and matures in five years, Transport Minister Hisham Arafat said. He said $461 million would go to infrastructure and $739 million for trains.

Five state-run companies and three private ones are involved in the construction expected to completed within two years, he added.

The rail link, which Arafat said will be 68 km (42 miles) long, will connect the 10th of Ramadan city to the new administrative capital.

The new capital, announced in March 2015, is intended partly to reduce crowding in Cairo but will also be home to government ministries and an airport.