Digital rendering of NEOM’s The Line project in Saudi Arabia
Line, NEOM
Saudi Arabia’s massive Neom mega-project, a multi-trillion-dollar plan to develop an area of land the size of Massachusetts, has been thrown into turmoil as the country faces questions about the economic viability of its ambitions. The chief executive was replaced in a major reorganization.
Neom’s board of directors announced on Tuesday the appointment of Aiman Al-Mudaifer as the company’s acting CEO, after Nadhmi Al-Nasr took charge of the project in 2018.
“As NEOM enters a new phase of delivery, new leadership will ensure operational continuity, agility and efficiency in line with the overall vision and goals of the project,” a Neom statement said. It did not disclose the reason for Nasr’s departure.
As envisioned by Saudi Arabia’s Crown Prince Mohammed bin Salman, the area will feature ultra-futuristic cityscapes and architecture, including The Line (two parallel skyscrapers stretching over 100 miles in length) and The Trout Trojena, a mountain ski resort capable of hosting the 2029 Asian Winter Games. The projects have been met with skepticism and criticism from environmentalists and engineers in other parts of the world.
Neom’s leadership reshuffle comes amid evolving fiscal pressures on the country, with oil prices and demand forecasts remaining subdued and Saudi Arabia’s budget deficit widening. Three people familiar with the matter told CNBC that budgets are facing cuts and projects are experiencing delays.
NEOM map of Saudi Arabia’s $500 billion megacity plan on the Red Sea coast.
Peter Holmes Furian | Stocks | Getty Images
Taking this line as an example, Reportedly downsized The originally planned length of 106 miles was reduced to just 1.5 miles – which still makes it the longest building in the world. Neom executives have verbally denied the reports, calling them “false” and saying work is proceeding as planned.
“NEOM is a fundamental pillar of Saudi Arabia’s Vision 2030 and all operations will continue to progress as planned as we deliver the next phase of our vast portfolio of projects, including THE LINE, Oxagon, Trojena, Magna and The Islands of NEOM, ” Tuesday’s statement came from the organization.
According to the October pre-budget report released by the Ministry of Finance, Saudi Arabia’s real GDP is expected to grow by 0.8% this year, a sharp decline from the previous forecast of 4.4%. Saudi authorities also expect the budget to remain in deficit in the coming years as the kingdom prioritizes spending to achieve the goals of its Vision 2030 economic diversification plan.
In addition, the International Monetary Fund estimates that Saudi Arabia’s fiscal breakeven oil price (the cost of a barrel of crude oil needed to balance the government budget) in 2024 is US$96.20; an increase of approximately 19% from the previous year. It is also 33% higher than the current price per barrel Brent crude oil, As of Wednesday afternoon, it was trading around $72.
