Lhasa (Agencies): An extension of the world's highest railway from Tibet's capital Lhasa to its second largest city, Xigaze, will be completed by 2015, as one of the plateau region's key construction projects during the 2011-2015 period.

The Lhasa-Xigaze railway is the first extension of the Qinghai-Tibet Railway that opened in July 2006, Xinhua news agency reported on Wednesday.

The 253-kilometre new line will pass through five counties and the 90-km-long Yarlung Zangbo Grand Canyon. Construction began in September 2010, with a budget of USD
1.95 billion.

The passenger and freight service will have a designed transport capacity of 8.3 million tonnes of freight annually.

Xigaze, with a history of more than 600 years, is Tibet's second largest city and the traditional seat of the Panchen Lamas.

Xigaze City is the administrative center of the Tibetan prefecture of the same name, which covers 182,000 square km bordering India, Nepal and Bhutan and includes Qomolangma (also known as Mount Everest).

The new rail link, plus a new airport that opened in November, will play a vital role in boosting tourism and accelerating the transport of natural resources.

Tibet will start building another extension of the plateau railway, from Lhasa to Nyingchi, in the next five years, according to the region's plan for economic and social development in the 2011-2015 period.