Iran Airports Company and France’s Vinci Airports are still locked in negotiations over the commercial terms of the contract to expand and upgrade Iran’s Shahid Hashemi Nejad International airport, located in the country’s second-most populous city of Mashhad.

According to a source with knowledge of the transaction, the ongoing political uncertainty and the new sanctions, which the US imposed on the Islamic Republic, could affect the timeline for the signing of a final contract.

Vinci earlier signed a build, operate and transfer (BOT) agreement with Iran Airports Company for the development of the Mashhad airport and another airport in Isfahan.

In June, sources in Iran said both schemes had already received a mandate from the French government for financing.

However, it is understood the development of the Isfahan airport has been put on hold.

The Mashhad Airport Authority recently awarded the local Rah Shahr International Group a contract for the supervision services of the expansion of Mashhad International airport.

The authority expects to award another deal for the project’s environmental impact assessment (EIA) soon.

The work involves the expansion of the international passenger terminal to 43,000 square metres. The local Kayson Incorporated will be the main contractor for the airport civils work.

Mashhad International is Iran’s second-largest airport next to Tehran’s Mehrabad International. It handled an estimated 8.2 million passengers in 2014.