Saudi Arabia Downsizes NEOM 2030 Project by about 75%

Sudan Events – Bloomberg

Saudi Arabia has scaled back its medium-term ambitions to develop the desert in NEOM, the largest project in Crown Prince Mohammed Bin Salman’s plans to diversify the oil-reliant economy, according to people familiar with the matter.
The Saudi government at one time hoped to have 1.5 million residents living in The Line, a sprawling futuristic city it plans to contain within a pair of mirror-covered skyscrapers, by 2030, but Saudi officials now expect the project to accommodate fewer than 300,000 residents by the time, according to a person familiar with the matter.
Saudi officials have long said that the Line will be built in phases, and they expect it to eventually cover a 170-kilometre-long desert area along the coast. But with the recent downsizing in plans, officials expect only 2.4 kilometers of the project to be completed by 2030, the person said. The person familiar with the matter, who requested not to be disclosed because the information is not for publishing to the public.
As a result, at least one contractor has begun firing a portion of the workers it employs at the site, according to a document seen by Bloomberg.

Representatives of NEOM and the Kingdom’s Public Investment Fund, the main entity that owns and finances the project, declined to comment.

Crown Prince Mohammed intends for NEOM, a $1.5 trillion project on the Red Sea coast, to be a masterpiece that will transform his country’s economy and serve as a testbed for technologies that could revolutionize daily life.

NEOM’s plans include the establishment of an industrial city, ports and tourism developments alongside the “The Line” project, and it is also scheduled to host the 2029 Asian Winter Games in a mountain resort called Trogena.

Work will continue on other parts of the broader NEOM project, and officials have maintained their overall goals for The Line, people familiar with the matter said.

Another development project within NEOM, transforming an island in the Red Sea into a luxury tourist destination known as Sindala, is scheduled to open this year.

The people familiar with the matter said that the reduction plans at The Line come at a time when the Kingdom’s sovereign wealth fund has not yet approved NEOM’s 2024 budget and shows that the financial realities of the trillion-dollar investments are beginning to raise concerns at the highest levels of the Saudi government at a time when… It attempts to achieve the ambitious Vision 2030 programme, the comprehensive initiative tasked with diversifying the Kingdom’s economy.

Officials said that some projects outlined in this program will be postponed until after 2030.

Finance Minister Mohammed Al-Jadaan said last December that a longer period is needed “to build factories and build sufficient human resources,” adding, “Delaying some projects, or rather extending them, will serve the economy.”
Mohammed Bin Salman’s ambitions for The Line project have captured the attention of city planners and architects from around the world, and drawings show that he envisions a city longer than the distance between New York and Philadelphia, all housed within mirrored structures that may be taller than the Empire State Building.
Officials had hoped The Line would welcome its first group of residents this year.
But instead, NEOM’s main success so far has been developing a project worth more than $8 billion to build solar and wind farms that will be used to produce so-called green hydrogen.
The Kingdom hopes to become one of the largest producers of this fuel in the world, as it looks to reduce its dependence on oil sales.
The latest effort to shrink the scope of the project comes as the Public Investment Fund evaluates a range of options to raise money — including accelerating debt sales and structuring equity offerings in its portfolio companies, Bloomberg News reported.
The sovereign wealth fund’s cash reserves fell to $15 billion as of September — the lowest level since 2020, the first year for which data is available.
In 2022, Crown Prince Mohammed said the first phase of NEOM is expected to cost 1.2 trillion riyals ($320 billion) by by 2030 and half of that is expected to come from the Public Investment Fund, which is headed by Saudi Arabia’s de facto ruler.