Neom restructure part of Saudi’s Vision 2030 shake-up

• Possible transfer of Neom assets
• Various policy options being considered
• Finance minister cites ‘fiscal discipline’

Saudi Arabia is considering a radical restructuring of its flagship giga-project Neom, people familiar with the matter have told AGBI.

Under one of various options being considered by senior policymakers in the kingdom, control of major assets would be transferred to other state-backed entities, according to sources speaking on condition of anonymity.

Saudi Arabia is appraising the shake-up as it reprioritises spending and oversight of its Vision 2030 plan.

Shifting Neom assets to established state-backed operators could sharpen execution, potentially altering timelines and budgets for contractors and suppliers.

The reshuffle may also ease pressure on the Saudi Public Investment Fund’s (PIF) balance sheet as officials have signalled a greater focus on fiscal discipline and a bigger role for private capital.

Neom and Saudi Arabia’s other giga-projects are vast state-backed developments central to Vision 2030, aimed at diversifying the oil-dependent economy, attracting investment, creating jobs and reshaping the kingdom’s global economic role.

PIF and Neom have not responded to requests for comment.

Further reading:

• Neom offers financial guarantees to lure private investors
• PIF spending cuts slow giga-projects and trigger layoffs
• Riyadh hopes to entice private sector to landmark projects 

The proposal would, if approved, place oversight of Oxagon, Neom’s port and floating industrial zone, under national oil company Saudi Aramco, according to people familiar with the matter, though no final decision has been taken.

Trojena, the planned mountain ski resort, would be overseen by the Ministry of Sport and Qiddiya Investment Co. 

The venue was expected to host the 2029 Asian Winter Games, but it was announced on Saturday that Saudi Arabia has postponed its plans to stage the event. It will instead put on standalone winter sports competitions, a statement by the Saudi Olympic and Paralympic Committee and the Olympic Council of Asia said.

Sindalah, the island resort and yachting centre, would be taken over by real estate development company Red Sea Global, which is behind the luxury Red Sea and Amaala projects.

Separately, a Neom employee with direct knowledge of staffing plans told AGBI this month that the organisation has been directed to cut headcount to about a third of existing levels.

A senior executive familiar with the project and speaking on condition of anonymity said: “If you ask me whether there is work ongoing at Neom, the answer is yes. 

“There are workers on the ground and they are busy. Are things moving fast? No. Spending on nearly every [Neom] project has been frozen and is now under intense reassessment.”

Tim Callen, a visiting fellow at the Arab Gulf States Institute in Washington, said that a complete review of Neom and the other giga-projects is needed to make sure they are based on realistic assumptions and that they are financially and technically feasible.

“Transparent adjustments to the projects would be well received by investors and should not be seen as ‘losing face’,” Callen said. 

‘Mature policymaking’

“It is a sign of mature policymaking to adjust projects as new information becomes available and it is better to make adjustments now than further down the line.”

Reuters/Denis Balibouse

Saudi finance minister Mohammed Al-Jadaan, speaking at the World Economic Forum in Davos last week, stressed the importance of fiscal discipline.

“The anchor of the economy is public finance,” Al-Jadaan said, calling it “critical” not to “compromise public finance for the sake of the economy”. 

“If you go and just spend as if there is no tomorrow, you are losing your anchor base while the economy is still growing and still diversifying. So we actually maintain that balance very delicately.”

Al-Jadaan said that spending should focus on areas that generate growth, jobs and GDP impact, and cautioned against overheating the economy. 

“There is no issue, no shame, no ego in adjusting [and] slowing down certain sectors or projects so the economy can grow with you.”

PIF is in the final stages of approving a revised investment strategy for Neom.

Governor Yasir Al Rumayyan said the plan is part of the fund’s new approach to resource allocation. “We don’t want to go to all and every investment with the same priority,” he told the Future Investment Initiative (FII) summit in Riyadh last year.

“This would help us in prioritising our capital deployment with the timelines”.

The PIF approved cuts of up to 60 percent across more than 100 of its companies at a December 2024 board review, slowing projects and triggering layoffs. 

Saudi Arabia’s giga-projects, including Qiddiya, Diriyah, the Red Sea developments and Roshn, bundle multiple mega schemes, which increases complexity and timelines.

Neom groups the Oxagon, Trojena, Sindalah and The Line projects in a 26,500 square kilometre Red Sea zone – more than 30 times the size of Singapore.

The futuristic city concept – an AI-enabled, renewables-powered, car-free zone with flying taxis, heavy automation and robotics – has drawn some of Vision 2030’s most controversial headlines amid intense scrutiny over cost and feasibility.

The project was initially estimated to cost hundreds of billions of dollars but the price tag has since climbed to trillions according to the Wall Street Journal.

Oil prices have also softened – Brent is around $64 a barrel versus an $81 average in 2024 – tightening the backdrop for state spending.

Focus has shifted to preparing for Riyadh’s Expo 2030 and the country’s hosting of the 2034 World Cup football tournament.

New investment strategy

PIF is finalising a revised investment strategy that will focus on six areas between 2026 and 2030, including Neom, Al Rumayyan told the FII in October. 

At the same event, investment minister Khalid Al Falih said the PIF should scale back spending and make room for private capital, which has been hesitant so far due to financial risks.

“Giga-projects have been taking a lot of resources from the government,” Al Falih said.

Ali Shihabi, an advisory board member of Neom, said in December that Saudi Arabia has shown it will “adjust direction before projects become structural liabilities”. 

“Flexibility has become even more valuable as artificial intelligence reshapes the economics of energy and industry,” he wrote in a column for Arab News. 

“At a time when many governments struggle to look beyond immediate pressures, Saudi Arabia is reviving the ability to think in decades while adjusting quickly as circumstances shift.”