The change in Neom leadership comes at a period of shifting financial strains on the kingdom
The CEO of Saudi Arabia’s massive Neom megaproject, a multi-trillion-dollar scheme to develop a territory in the size of Massachusetts, was replaced in a significant reshuffling as the kingdom faces concerns about the economic feasibility of its goals.
According to a statement released by Neom on November 12, Nadhmi al-Nasr, the longtime chief executive officer of the $500 billion Saudi development project launched by Crown Prince Mohammed bin Salman, has departed, but there was no reason for his departure.
So, the Neom board of directors stated that they would appoint Aiman Al-Mudaifer as the acting chief executive after the unannounced departure of Nadhmi Al-Nasr, who was assigned to oversee the project in 2018.
According to a Neom release, as Neom enters a new phase of delivery, this new leadership will guarantee operational continuity, agility, and efficiency, all of which will align with the overall vision and objective of the project.
The region, as envisioned by Saudi Crown Prince Mohammed bin Salman, would be host to ultra-futuristic cityscapes and buildings like Trojena, a mountain ski resort that might host the 2029 Asian Winter Games, and The Line, two parallel skyscrapers that span more than 100 miles. These projects have faced skepticism and criticism from engineers and environmentalists in different parts of the world.
Prince Mohammed has invested hundreds of billions of dollars of the kingdom’s Public Investment Fund (PIF), a sovereign wealth fund, into economic projects.
The Public Investment Fund is the sovereign wealth fund of Saudi Arabia. It is one of the largest sovereign wealth funds in the world, with a total estimated assets of US$930 billion (£718.2 billion). It was established in 1971 to invest funds instead of the Government of Saudi Arabia. Crown Prince Mohammed bin Salman, who has been de facto ruler of Saudi Arabia since 2015, is in charge of the wealth fund.
The change in Neom leadership comes at a period of shifting financial strains on the kingdom, as the oil prices and demand forecasts stay low and Saudi Arabia’s budget deficit widens. Projects are getting delayed, and budgets are seeing cutbacks.
For example, The Line, originally intended to be 106 miles, has supposedly been shortened to just 1.5 miles, but it would still be the longest structure in the world. Neom executives have vocally denied these rumors and claims that work was going according to schedule.
Neom is a fundamental pillar of Saudi Vision 2030, and all operations are proceeding as per schedule. The next phase of an extensive portfolio of projects includes The LINE, Oxagon, Trojena, Magna, and The Islands of NEOM.
In an October pre-budget study, the Ministry of Finance predicted that Saudi real GDP would grow by 0.8% this year, a sharp decline from a previous estimate of 4.4%. As the kingdom prioritizes spending to meet the Vision 2030 economic diversification program goals, Saudi authorities anticipate that the budget will be in deficit for several years.
IMF estimated that Saudi Arabia’s fiscal breakeven oil price, or the price at which a crude barrel costs to balance the government budget, would be $96.20 in 2024, a 19% increase from the previous year. It is also 33% more expensive than the current price of Brent crude, which is approximately $72.
The central component of the Vision 2030 plan, which aims to diversify the economy away from oil, was the Red Sea mega project, an industrial and urban development nearly the size of Belgium that will accommodate almost 9 million people.
Some schemes were reduced due to rising costs, like the Line, a futuristic city inside Neom that expands 170 km into the desert.
A report published stated that $925 billion PIF was preparing a reorganization to focus on projects with a higher chance of success. Saudi Arabia, the world’s largest oil exporter, is still mostly dependent on hydrocarbon earnings, so low oil prices are straining the state budget.
