Saudi gigaprojects take $8 billion hit in reality check for diversification efforts
PIF valued gigaprojects on its books at 211 billion riyal ($56.24 billion) as of end-2024, over 12% lower than the 241 billion riyal in 2023, the company said in its 2024 annual report released Wednesday.
The accounting move reflects cost overruns, delays and shifting market conditions for projects such as NEOM, the desert mega-city nearly the size of Belgium intended to house nearly nine million people on the Red Sea.
NEOM has repeatedly faced implementation challenges and delays, with sources telling Reuters the project has been scaled back as the kingdom prioritises infrastructure essential to hosting global sporting events, like the 2034 World Cup.
"A more targeted investment programme and with longer timelines is actually positive given the weaker oil revenue backdrop, and the large hosting event that Saudi has won. These were won after Vision 2030 was designed and will need significant investment," Monica Malik, Chief Economist, Abu Dhabi Commercial Bank.
"The recalibration is also important to contain the misallocation of resources and cost pressures of the projects," she said.
The revision is a stark acknowledgment that the kingdom's transformation blueprint is running up against financial and practical realities, coming at a sensitive time for Crown Prince Mohammed bin Salman's Vision 2030 agenda, which hinges on diversifying Saudi Arabia's oil-dependent economy.
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