Saudi megacity NEOM to cost almost $9 trillion, take over 50 years to build, internal audit warns

Saudi Arabia’s construction of its megacity project NEOM is projected to cost almost $9 trillion and take over five decades to complete, an internal audit has revealed.

According to a report by the Wall Street Journal (WSJ), an internal audit presented to NEOM’s board of directors last summer found that the Saudi megacity project is set to take significantly longer than expected and is rapidly becoming a drain on financial resources, with delays and budget overruns plaguing the project.

Compared to the initial cost of $500 billion previously set for the project’s completion, the new cost projected by the audit reaches $8.8 trillion, with the project also reportedly facing another 55 years of construction.

That cost amounts to more than 25 times the amount of Saudi Arabia’s annual budget, with Saudi Arabia’s sovereign wealth fund – the Public Investment Fund (PIF) – itself worth only $925 billion.

The audit notably found that the discrepancies were largely caused by NEOM executives who had set up the project’s business plan on overly optimistic and unrealistic assumptions, particularly in order to justify an increase in cost estimates. According to the audit, there was “evidence of deliberate manipulation” by “certain members of management”.

That enabled some of the firms and companies contracted by NEOM to gain a tremendous amount of profit from their contracts, one example cited being the consulting firm McKinsey & Company, which reportedly earned over $130 million annually for its services and involvement in NEOM’s planning and implementation.

The revelation of the audit comes at a time when NEOM has in recent years been increasingly rocked by instability, changes in leadership, and significant scalebacks due to shortages in funds, as well as scandals regarding its human rights record and alleged mismanagement.

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