The 52 kilometer (32 mile) project is set to be completed by mid-2018 with funding from a 14-year loan, Mostafa Madbouly said in a statement, without saying who was providing the funds.
The train will connect the Cairo metro system, which is being expanded, to areas west of the capital including 6th of October City and Sheikh Zayed.
Cairo, a centuries-old metropolis where more than 20 million people reside, has suffered for years from crumbling infrastructure and neglect. Improved public transport could help reduce congestion in streets where commuters compete with commercial traffic, three-wheeled tuk-tuks and donkey carts.
The move comes weeks after the government announced a project to build a new capital southeast of Cairo, a proposal that has received mixed reviews.
Madbouly said technical and financial offers for the rail project had been approved, but Reuters could not immediately reach the companies to confirm the details.
Orascom, an engineering and building business, is controlled by Egypt’s prominent Sawiris family. It announced plans late last year to build a $3 billion coal-fired power station on the Red Sea coast in a joint venture with Abu Dhabi state fund International Petroleum Investment Co (IPIC).
Bombardier provides rail vehicles, signaling and control equipment, as well as making planes.
Reporting by Stephen Kalin and Nadia El Gowely; Editing by David Holmes