Neom’s woes accumulate with report detailing cost overruns

Questions continue to pile up about whether Saudi Arabia’s massive Neom development can come close to fulfilling its cosmic ambitions.

A recent tip-off to problems plaguing the sprawling project was a celebrity-packed launch party in October on Neom’s Sindalah resort island, where Crown Prince Mohammed bin Salman was a surprise no-show, The Wall Street Journal reports.

Three years late with more than $2 billion in cost overruns, what was supposed to be Neom’s glittering early showpiece was more an active construction site – with Sindalah’s hotels unfinished and high winds disrupting ferries and golf tee-offs, the Journal recounts. Weeks later, Neom CEO Nadhmi al-Nasr was out of a job.

“After spending more than $50 billion, the Crown Prince’s sci-fi-inspired dreams – an arid-mountain ski resort, a floating business district, and The Line, the 106-mile-long pair of Empire State Building-height skyscrapers that is Neom’s centerpiece – have collided with reality,” the newspaper writes.

Evidence of the project’s epic troubles comes from a 100-page internal audit that was presented to members of Neom’s board last spring and reviewed by the Journal.

The report estimates the capital expenditure required to build Neom to its “end-state” by 2080 at $8.8 trillion – more than 25 times the annual Saudi budget – and $370 billion for its first phase by 2035. It said the audit found “evidence of deliberate manipulation” of finances by “certain members of management.”

At Neom’s Trojena project, which will be the Gulf’s first outdoor ski resort and official site for the 2029 Asian Winter Games if it’s built by then, the report show cost overruns of more than $10 billion.

A Neom spokeswoman said the Journal was “incorrectly interpreting” and misrepresenting figures in the report, adding that the project “remains on track, demonstrating tangible progress.”