Saudi Arabia’s $1.5 trillion Neom megacity faces major setback
Saudi Arabia’s $1.5 Trillion Neom Megacity Faces Major Setback
Saudi Arabia’s ambitious $1.5 trillion Neom megacity project, a crucial part of the Kingdom’s Vision 2030 for economic diversification, has encountered another significant obstacle. The project's long-time CEO, Nadhmi al-Nasr, has abruptly stepped down without providing a reason. This leadership change is the latest in a series of challenges, including revised timelines and reports of harsh working conditions.
Visionary Project Under Strain
Launched in 2017 by Saudi Crown Prince Mohammed bin Salman, Neom is designed to be a 26,500 square kilometer ultra-modern city in Tabuk Province. Al-Nasr, who has been at the helm since 2018, has left amid reports suggesting his departure was due to unmet performance goals and a controversial management style. Allegedly, al-Nasr was known for making derogatory remarks and threats towards employees, boasting about driving them to their limits.
Replacing al-Nasr is Aiman al-Mudaifer, a senior official from Saudi Arabia’s Public Investment Fund (PIF). Al-Mudaifer, known for his strategic understanding of Neom’s vision and logistical challenges, aims to bring operational continuity and efficiency to the project.
Scaling Back Ambitions
The departure of al-Nasr comes at a time when Neom's ambitions are being significantly scaled back. Initially envisioned as a city to house 1.5 million people by 2030, current projections suggest fewer than 300,000 residents. Only a small portion of the planned 170-kilometer mirrored skyscraper, "The Line," is expected to be completed by 2030.
Financial challenges have also intensified. The project, heavily reliant on oil revenues, is strained by lower-than-expected oil prices, which are around $24 per barrel below the necessary level to balance Saudi Arabia’s budget. This financial pressure has led the PIF to shift its strategy towards projects with higher success potential.
Investor Hesitation and Workforce Issues
Investor reluctance continues to be a major hurdle for Neom. Despite Saudi Arabia’s efforts to attract foreign capital, the grand scale of Neom has caused skepticism among Western private equity firms and financiers. Furthermore, reports of harsh working conditions and discriminatory treatment by some executives have added to the project’s woes.
Controversy Over Forced Relocations
Neom has also faced criticism for its social and environmental impacts. The construction has required the relocation of local communities, including the Howeitat tribe, resulting in controversy and resistance. Reports indicate that some Howeitat members who protested faced severe consequences, including death sentences and extrajudicial actions.
Environmental Concerns
Environmental concerns persist as well. While Neom’s planners emphasize renewable energy, experts question the sustainability of such a massive urban development in the desert. The environmental cost of building the required infrastructure has raised skepticism worldwide.
Future Prospects
Despite these setbacks, Neom remains a cornerstone of Crown Prince Mohammed bin Salman’s Vision 2030. The project aims to reduce Saudi Arabia’s dependence on oil and create a model city for future generations. With the Kingdom set to host the 2034 FIFA World Cup, significant infrastructure development will be necessary, potentially aligning with Neom’s goals.
Neom is designed to include various zones, such as a floating industrial complex and a global trade hub, with "The Line" being the most iconic part. Powered by renewable energy, Neom aims to generate approximately 460,000 jobs and contribute an estimated $48 billion to Saudi Arabia’s GDP.
Developers initially planned for major sections of Neom to be completed by 2025, with additional expansions by 2030. However, the project's future remains uncertain amid ongoing challenges.
