The agreement authorises the municipality to access railway property for studies and preliminary works for the MetroRiel project.
The 20.5km north-south line will serve 20 stations with a journey time of around 40 minutes and forecast ridership of around 250,000 passengers per day.
The line will be electrified with an initial fleet of 35 LRVs, increasing to 47 vehicles in the longer-term.
The $US 770m project will be implemented by Guatemala's National Agency for the Development of Economic Infrastructure (Anadie) on a public-private partnership basis.
Major construction is expected to start in 2021.
Spanish engineering consultancy Idom completed a feasibility study for the project in 2016.
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