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Officials may be looking to slow the pace at which they’re building out The Line, a cornerstone of the USD 500 bn Neom development, Bloomberg reported last week, citing sources it says have knowledge of the matter. The discussion comes as the Public Investment Fund (PIF) is yet to approve Neom’s budget for this year, they said.
The crux of it: Neom’s flagship project The Line — which is projected to cost anywhere between USD 100 bn to USD 200 bn — is now expected to be home to less than 300k people by the end of 2030, down from an initial forecast of 1.5 mn residents, one of the sources said. A slowdown in construction could see only 2.4 km of the 170-km The Line completed by the end of the decade, the source said. This has pushed at least one of the contractors working on the project to layoff some of the workers on site, according to a document seen by Bloomberg.
A very selective slowdown? The sources said work is progressing on other parts of the sprawling Neom gigaproject, with its luxury island destination Sindalah set to open its doors to visitors sometime this year. Regular readers of EnterpriseAM Saudi will have read a drumbeat of announcements this year about progress at Oxagon, Neom’s industrial hub.
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This may have been in the works for a while: The government hinted in December that it could strategically slow down the execution of some of its economic transformation projects, seeing some conclude past their initial 2030 deadlines. “Certain projects can be expanded for three years — so it’s 2033 — some will be expanded to 2035, some will be expanded even beyond that and some will be rationalized,” Finance Minister Mohamed Al Jadaan said at the annual budget forum.
ALSO- Officials don’t want government borrowing to soak up liquidity the private sector needs to grow. Access to debt for both private companies and citizens is key to growth, Al Jadaan suggested at the time, noting that the government has no interest in crowding them out. Policymakers have also considered the delay in terms of how much international debt the Kingdom wants to take on, emphasizing the need to stay below a sustainable debt ceiling measured against both GDP and non-oil GDP, the minister added.
REMEMBER- The government will need to line up USD 640 bn to fund its construction pipeline, just for the next 5 years, squeezing local lenders for USD 384 bn if they are to take up 60% of the pipeline, Bloomberg reported last month, citing data compiled by Dubai-based analysis firm MEED.
