The project, presented by regional councillor for transport, housing and infrastructure, Ms Rosalía Gonzalo, on July 19 has passed the public information stage, and is now due to enter the environmental impact assessment stage.
The most viable option includes four new stations and the interchange, with the extension expected to cost more than €300m.
The preferred route begins at Plaza Elíptica and adds a new station near Madrid Río, with exits to Paseo de Santa María de la Cabeza and Paseo de Yeserías highways.
From there, the line will run as close as possible to the current Palos de la Frontera suburban rail station to connect with Line 3, before continuing to Atocha station, which serves Line 1 as well as inter-city and high-speed services.
The extension would terminate at Conde de Casal at a new transport interchange that will also house the intercity bus terminals that connect the capital to cities along the A-3 corridor.
A final proposal will be drawn up and presented to the Environment and Regional Planning Department, which will then be responsible for completing the necessary environmental impact assessment on the project within four months.
The government of Madrid will award the project following the environmental process, with work potentially starting in 2020.
The extension will reduce congestion on the orbital Line 6, currently the busiest on the network, and will offer an alternative route for passengers travelling to Atocha and those entering from the A-3 corridor.
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