Saudi Arabia Recalibrates NEOM Gigaproject Amid Rising Costs

Saudi Arabia is scaling back its ambitious NEOM project to prioritize essential developments for hosting global sports events. Rising costs and economic reliance on oil have compelled the kingdom to streamline plans. NEOM is central to Vision 2030, aiming for economic diversification beyond oil.

Saudi Arabia is adjusting its grandiose NEOM gigaproject, prioritizing completion of elements critical for hosting global sports events over the next decade, sources informed Reuters following the abrupt exit of the project's longstanding CEO. Crown Prince Mohammed bin Salman has invested hundreds of billions via the PIF sovereign wealth fund in various development projects.

The kingdom, a leading oil exporter, is curtailing its extensive development plans due to prolonged low oil prices affecting its hydrocarbon-dependent economy. ADCB's chief economist, Monica Malik, noted that project prioritization is already in motion.

NEOM, billed as a Red Sea urban-industrial hub, crucial to the prince's Vision 2030 for oil-independent growth, has seen its costs soar, prompting scaled-back efforts like "The Line." The path now focuses on a 2.4 km stretch featuring a World Cup stadium, while planning for future phases of NEOM remains under evaluation.

(With inputs from agencies.)