Dhaka, Jan 24 (IANS): Japan has agreed to provide loans to construct Bangladesh's first underground railroad, the media reported on Thursday.

A stretch of the 26.6 km rail line will be constructed in Dhaka in two phases under the Mass Rapid Transit (MRT-1) project, said Project Director Md Saidul Haque, adding the design was being prepared.

"Japan has agreed to finance the project," he told bdnews24.

Bangladesh is likely to finalise the 40th loan package with the Japan International Cooperation Agency in June, said Shahidul Islam, Additional Secretary of the Economic Relations Division.

According to the contract, Bangladesh will get $2.5 billion, which will be spent on five projects including the MRT-1.

This financial assistance of Japan will be more than what it gave in previous fiscal years.

The first part of the MRT-1 project will be the airport route and it will be 16.4 km-long. The second part of will cover 10.2 km.