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A recent report about the Neom city has claimed that this mega project is turning into a financial disaster for Saudi Arabia as the funds for the project have overrun and the completion of the project seem almost impossible.
A report in the Wall Street Journal suggests that Saudi Arabia’s now eight-year-old Neom project — a futuristic, carbon-neutral, 105-mile-long linear city envisioned by Crown Prince Mohammed bin Salman — has become a financial sinkhole.
Saudi Arabia, which has already shelled out $50 billion, could reportedly face another 55 years of construction, with an astonishing projected cost of $8.8 trillion, according to an internal audit presented to Neom’s board last summer. That’s more than 25 times Saudi Arabia’s annual budget, notes the Journal.
The situation is starting to resemble Saudi Arabia’s own Waterloo, with MBS misjudging the monumental challenges inherent in his strategy, much like Napoleon did before him. Among the harsh realities threatening to derail the project are insufficient labor, inadequate roads, and a lack of electricity, media reports claimed.
There are some winners, however. Consulting giant McKinsey & Company is reportedly earning more than $130 million annually for its services, despite some controversy surrounding its role, given the firm’s involvement in both the planning and validation of some of the project’s financial projections, per the story. A McKinsey spokesman tells the WSJ the firm has “strict protocols to prevent conflicts of interest in our engagements.”
Neom was designed to be a marvel of modern civilisation—an ultra-high-tech, sustainable city emerging from the desert. With plans for a 106-mile-long mirrored skyscraper, an artificial ski resort, and a floating business district, Crown Prince Mohammed bin Salman envisioned Neom as a revolutionary leap into the future. However, reality has been less accommodating. Costs have skyrocketed, deadlines have been pushed back, and an internal audit has flagged serious financial mismanagement.
According to a Wall Street Journal report, Neom’s estimated cost has ballooned to $8.8 trillion—over 25 times Saudi Arabia’s annual budget. The first phase alone, set for 2035, is projected to require $370 billion. So far, the kingdom has poured in $50 billion, but progress has been slow.
Saudi Arabia has yet to react to the WSJ report.
