The Netherlands’ Naco has emerged as the lead bidder for the technical and financial proposals for the project management consultancy (PMC) contract for the airport city that will be built around Iran’s Imam Khomeini International airport.

Sources familiar with the project, however, said an award is not imminent due to multiple layers of regulatory, financial and political issues that the Iranian government needs to address before the project can move ahead.

The financing structure available for the project involves an 80:20 split between the potential private investors and the Iranian government. While the private investor will supply financing, the government’s share of the investment will come in the form of land, not cash. “This has been a major sticking point since the PMCs insist on cash not land,” the source told MEED.

What makes the land offer especially unattractive is that the area where the airport is located is divided between the land site and the air site. The land site covers car parking, drop-off areas and areas where the pre-departure processes take place until customs and immigration, and is overseen by Iran’s national police. The air site covers all areas after customs and immigration, including the embarkation area and duty free shops, and are overseen by Iran’s Revolutionary Guard.

As a result, the duty free shops and spaces within its proximity - potentially the most commercially lucrative - cannot be released to foreign investors.

This means potential investors can build and operate car parking spaces on the land site, but this is less lucrative than duty free shops.

It is unlikely that potential contractors and investors, which are expected to form a consortium for the development of the airport city, will find the financing option on offer as acceptable, said the MEED source

Apart from Naco, other bidders for the PMC contract are Brazil’s Progen, Italy’s One-works, Germany’s Obermeyer and Canada’s Zas Group.

The planned 140 million-square-metre Imam Khomeini Airport City (IKAC) will feature a free zone, cargo facilities and residential communities, and could take up to 30 years to complete.

The design for the airport city’s masterplan was completed in 2012 by Tehran-based Rah Shahr International Group in partnership with Japan’s Nikken Sikkei.