Saudi Arabia has asked consulting firms to conduct a strategic review of its ambitious plans for building a futuristic city known as The Line, according to several people familiar with the matter, as the kingdom assesses priorities for its project-related expenditures.
A unit of the sovereign wealth fund is asking the firms to review whether current plans for The Line - which is planned to be a 170-kilometer (105-mile) long car-free city that’s part of Saudi Arabia’s Neom development project - are feasible and to suggest possible changes, said the people, who asked not to be named discussing private matters.
The government may decide no changes are needed and the project can continue as planned, the people said. Any changes would need the agreement of executives at the Public Investment Fund and then the government itself, they said.
“As is typical with large-scale, multi-year projects, strategic reviews are common practice and occur several times over the course of a major development project or infrastructure program,” Neom said in a statement. “The Line remains a strategic priority and Neom is focused on maintaining operational continuity, improving efficiencies and accelerating progress to match the overall vision and objectives of the project.”
The assessment underscores the kingdom’s continued push to recalibrate projects under its Vision 2030 plan to reshape the economy. Lower oil prices, weaker-than-projected foreign investment and budget shortfalls mean Saudi Arabia must now decide what to focus on first and at what pace.
Brent crude prices currently at around $71 a barrel put fresh pressure on the kingdom’s finances. Bloomberg Economics estimates that Saudi Arabia needs a price of $96 a barrel to balance its budget, and $113 if domestic spending by the PIF on the crown prince’s projects is included.
The latest moves come in the wake of Aiman Al-Mudaifer taking over as chief executive officer of Neom, a wider area of which The Line is the main part. One of the assessment’s key goals is looking for ways to commercialize the project, some of the people said.
Another Neom development has also faced challenges. Sindalah, a high end tourism project, is still sitting idle despite being launched last year, some of the people said. The project was the first to open at Neom but stalled over issues including design flaws, the people said. Neom declined to comment on Sindalah.
The PIF did not respond to an official request for comment.
The Line is one of the flagship projects of Crown Prince Mohammed bin Salman’s $2 trillion plan to take Saudi Arabia into a post-oil era. It raised eyebrows when it was announced in 2017 given the sheer scale of the proposed construction. At one point the government hoped it would have 1.5 million residents by 2030 and it’s still meant to have a stadium on top of a skyscraper to host games for the 2034 men’s football World Cup.
The project has faced scale-backs, Bloomberg News reported last year, with officials now expecting the development to house fewer than 300,000 residents by the end of the decade.
For now, barely anyone lives there beyond those working on The Line itself and nearby sites.
Investors have long-called for the rationalization of giga-projects, with the International Monetary Fund in its latest assessment of the kingdom saying it encourages new spending reviews undertaken by the government.
“Any plan that ensures responsible spending and long-term viability of the projects beyond upcoming events like the 2029 Winter Games, 2030 World Expo and 2034 FIFA World Cup, is welcome,” said Ziad Daoud, chief emerging-markets economist at Bloomberg Economics. “This is especially important as Saudi Arabia has shifted from being a net lender to the world to a net borrower.”
