Saudi Arabia’s Neom
Saudi Arabia’s Neom megaproject has announced leadership change amid growing financial pressures. The board has appointed Aiman Al-Mudaifer as acting chief executive, succeeding the seemingly beleaguered Nadhmi Al-Nasr who had unexpectedly quit that project that he has been guiding since 2018. That ambitious project aims to turn an area the size of Massachusetts into a futuristic, high-tech region. It was made public on November 12; Neom’s board of directors said Al-Mudaifer’s management will provide continuity and efficiency to the operational phase as it moves into the delivery phase. The reasons for Al-Nasr’s departure, however, are still unknown.
Neom is the smart city at the forefront of the Vision 2030 initiative by Saudi Crown Prince Mohammed bin Salman, who wishes to develop the kingdom’s economy away from oil. Included among those are the new city concept The Line-a 100-mile-long separate system of two parallel skyscrapers-and Trojena, a ski resort slated to host Asia’s Winter Games in 2029. But these grandiose plans raise skepticism and criticism, particularly from environmentalists and engineers, over the technical and environmental feasibility of the project.
The reshuffling comes at a time when Saudi Arabia is grappling with economic challenges, including a widening budget deficit, subdued oil prices, and lowered demand forecasts.
Multiple reports suggest that some Neom projects have faced delays and cutbacks. For example, The Line-a city planned to extend 106 miles when it was first proposed-is said to have been scaled back to just 1.5 miles in length-though Neom executives have denied this report as well, saying the work is on schedule.
Economic conditions have also deteriorated. Saudi Arabia’s real GDP growth is projected to plummet significantly from 4.4% to just 0.8% for the year 2024. This is coupled with a rising fiscal breakeven oil price, which the International Monetary Fund puts at around $96.20 per barrel in 2024-an amount much higher than the current price of Brent crude, which floats at around $72. The kingdom may therefore have to contend with significant budget deficits over the coming years as it focuses spending on projects that are in Vision 2030 while it works towards achieving its aggressive diversification goals.
