Financial Concerns Surround Saudi Arabia’s Neom Project

According to a recent report by the Wall Street Journal, Saudi Arabia’s ambitious Neom project, a futuristic and carbon-neutral linear city, has become a significant financial burden. The project, which has been in development for eight years, was conceived by Crown Prince Mohammed bin Salman.

The project has been plagued by numerous delays and cost overruns, with the country already having spent $50 billion. An internal audit presented to Neom’s board last summer reportedly indicated that the project could face an additional 55 years of construction, with a staggering projected cost of $8.8 trillion. This amount is more than 25 times Saudi Arabia’s annual budget, as noted by the Journal.

The situation has drawn comparisons to Saudi Arabia’s own version of the Battle of Waterloo, with Crown Prince Mohammed bin Salman potentially misjudging the significant challenges inherent in his strategy. The project faces numerous harsh realities, including inadequate labor, insufficient roads, and a lack of electricity, which threaten to derail its progress.

Despite the challenges, some parties are benefiting from the project. Consulting giant McKinsey & Company is reportedly earning over $130 million annually for its services, although its role has been surrounded by controversy due to its involvement in both the planning and validation of some of the project’s financial projections. A McKinsey spokesman has stated that the firm has “strict protocols to prevent conflicts of interest in our engagements,” as reported by the WSJ.