Saudi Arabia Seeks Fresh Study on The Line’s Feasibility
Saudi Arabia is commissioning consulting firms to conduct a strategic review of its ambitious project, The Line, as it reassesses priorities for project-related expenditures.
This review comes amid concerns about budget shortfalls and lower oil prices.
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Project Overview
The Line is envisioned as a 170-kilometer (105-mile) long, car-free city that is part of the larger Neom development project. The government aims to evaluate the feasibility of current plans and consider potential modifications.
Key Points:
- Consulting Firms’ Role: A unit of the sovereign wealth fund is tasked with assessing whether the plans are sustainable and suggesting any necessary changes.
- Decision-Making: Any modifications would require approval from executives at the Public Investment Fund (PIF) and the government.
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Strategic Priorities
Neom emphasized that strategic reviews are standard for large-scale projects, and The Line remains a strategic priority. The focus is on maintaining operational continuity, improving efficiencies, and accelerating progress to align with the overall vision of the project.
Economic Context
The review is taking place against a backdrop of:
- Lower Oil Prices: Brent crude is currently around $71 per barrel, exerting pressure on Saudi finances. The kingdom requires a price of $96 per barrel to balance its budget.
- Budget Shortfalls: Weaker-than-expected foreign investment has necessitated a recalibration of priorities under the Vision 2030 plan.
Leadership Changes
The assessment follows the appointment of Aiman Al-Mudaifer as CEO of Neom, with a focus on finding ways to commercialize The Line project.
Other Challenges
Another Neom development, Sindalah, a luxury tourism project, has faced delays due to design flaws and remains idle despite being launched last year.
Future Expectations
Originally projected to accommodate 1.5 million residents by 2030, recent estimates indicate that the development may house fewer than 300,000 residents by the end of the decade. The Line is a flagship project in Crown Prince Mohammed bin Salman’s $2 trillion plan to transition Saudi Arabia into a post-oil economy, including ambitious plans for a stadium atop a skyscraper for the 2034 men’s football World Cup.
The upcoming review will play a crucial role in shaping the future of this monumental project amid shifting economic realities.
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