Replying to a Calling Attention motion in the Assembly, he said the appointment of general consultant for the project was in the final stage.
Water Metro is envisaged to be developed as a feeder service to the Kochi Metro rail.
It proposes to set up 38 jetties connecting 10 island communities, covering a 76-km-route network.
"It is a significant project with several peculiarities. It is expected to improve the connectivity of islands in Kochi backwaters with the main land," Chief Minister said.
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"Land acquisition procedures have already begun. The work of the project will be launched according to the getting of environment clearance," he said adding that the first phase of the project was expected to be completed in 20 months.
The government would later consider expanding the project to nearby areas like Muziris heritage site, Kumbalangi and so on, Vijayan added.
Moving the motion, Hibi Eden (Congress) said the multi-model transport system was aimed at shifting 10 per cent road traffic through waterways in and around Kochi.
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