Saudi Arabia’s Neom megacity project is set for significant budget cuts, with the government planning to spend around $16 billion on terminating parts of the ambitious initiative within five years. This figure surpasses spending on some projects being scrapped.
According to Semafor report, Neom’s budget includes 60 billion Saudi riyals ($16 billion) in anticipated payments to contractors due to termination or downsizing of long-term agreements following major scaling back of the project.
Launched under Vision 2030 by Mohammed bin Salman, Neom was envisioned as a futuristic development including coastal resorts, an industrial zone, a mountain ski destination and The Line – a linear city stretching across the desert.
The Line’s scope was significantly reduced after rising costs and delays prompted a strategic review, from 170-kilometre stretch to a smaller scale.
These termination payments stem from penalty clauses in contracts tied to cancelled or downsized projects. This reflects broader reassessment of Neom’s scale and financial viability as authorities manage escalating costs.
The Financial Times reported officials considering a much smaller version of the original vision, with several architects and urban planning experts questioning feasibility due to economic and planning perspectives.
Neom has so far cost Saudi Arabia around $64 billion, with The Line alone projected at an investment of roughly $500 billion.
Following Aiman Al-Mudaifer’s appointment as chief executive last year, a strategic review led to restructuring, layoffs, and revisions in development plans according to reports.