Saudi Arabia's economy minister dismissed recent reports that the NEOM mega-project, a $1.5 trillion futuristic desert development on the Red Sea coast, is scaling back some of its plans.
“All projects are moving full steam ahead,” Faisal Al Ibrahim told CNBC's Dan Murphy on Monday during the World Economic Forum's special meeting in Riyadh.
“We intend to do something unprecedented and we are doing something unprecedented, and we will deliver something that is unprecedented.”
In early April, reports emerged in the Western media that The Line project, a planned glass-walled city that would stretch 170 kilometers through the desert by 2030, will be just 2.4 kilometers long by then would have – a reduction of 98.6%. . Citing anonymous sources with knowledge of the matter, the first report from Bloomberg said the Saudi government's original plan to have 1.5 million people living in The Line by 2030 was reduced to 300,000.
The alleged scaling back of plans, at least in the medium term, comes amid reported concerns about the finances of NEOM, which is part of the kingdom's broader Vision 2030 initiative to diversify its economy away from oil. According to Bloomberg's report, Saudi Arabia's sovereign wealth fund, the Public Investment Fund, has not yet approved NEOM's 2024 budget.
Al Ibrahim emphasized that the projects would be delivered as planned, but noted that decisions were made with a view to “optimal economic impact.”
“We are seeing feedback from the market, we are seeing more interest from investors and we will always prioritize where we can optimize for optimal economic impact,” he said.
“Today, the kingdom's economy is growing faster, but we don't want it to overheat. We do not want to deliver these projects at the expense of too many imports, against our own interests. We will deliver these projects in a way that meets these priorities, delivers these projects and has the optimal healthy impact for our economy and the… healthy non-oil growth within it.”
NEOM political map of Saudi Arabia's $500 billion megacity project along the Red Sea coast. Location of the smart and tourist city with autonomous legal system. English labelling. Vector.
Peterhermesfurian | Istock | Getty Images
Nevertheless, the minister emphasizes that “for NEOM, the projects remain at the intended scale as planned. There is no change in scale.”
“It is a long-term project with a modular design,” he said. “The rest of the mega projects are there to be delivered for specific impacts in specific sectors.”
When asked what kind of message the reported timeline and changes in scale would send to private investors, Al Ibrahim said decisions would be made according to the needs and returns of the projects, and that all developments within NEOM are seeing growing interest from investors .
“Keep in mind that these sectors did not exist in the past. They are being built from scratch. They require some investment and are all-in from the government and the sovereign wealth fund,” he said.
“And we are seeing increasing interest from investors in all these projects. These projects will be delivered at their scale and in a manner that prioritizes the needs of the projects, their return on investment and their economic impact. It's like minimizing any leaks and minimizing the risk of overheating.”
