The extension of a landmark railway from Tibet's capital, Lhasa, to its second-largest city, Xigaze, is in full swing and will be completed by 2015, officials said Tuesday.

As of the end of 2011, 3.4 billion yuan (538 million U.S. dollars) had been poured into the Lhasa-Xigaze railway, about a quarter of the total budget for the project, Tibet's regional development and reform commission said in a statement.

The railway, the first extension of the Qinghai-Tibet Railway that opened in July 2006, is one of the plateau region's key construction projects during the 2011-2015 period.

Construction workers have finished laying 14.08 million cubic meters of roadbed, about 77 percent of the total, and built 40 percent of the tunnels along the road, said Jin Shixun, chief of the commission.

The 253-km 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 13.3 billion yuan (2.1 billion U.S. dollars).

It is designed to have a transport capacity of 8.3 million tonnes of freight annually and will allow trains to travel at a minimum speed of 120 km per hour.

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 Mt. Qomolangma (Mt. Everest).

Jin said the new rail link 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.