Iran has cancelled a preliminary agreement with the French industrial group Bouygues to expand the Imam Khomeini International Airport (IKIA) south of Tehran, said a report.

The company had signed a memorandum of understanding (MoU) in January last year to build and operate a terminal at IKIA which will able to handle 20 million passengers a year, reported The Medi Telegraph, citing a senior official.

"The MoU had seven paragraphs under which it was decided that Bouygues fulfil them in various financial, technical and other areas in four months and submit their documents to us so that talks to invest in the terminal continue," stated Mahmoud Navidi, the managing director of IKIA Airport City Company.

However, the company failed to do so and hence, early this year we cancelled the agreement, he added.