Saudi NEOM to Spend $16B Canceling Contracts While Allocating $11B for OXAGON and Utilities Through 2030

Saudi authorities expect to spend 60 billion riyals ($16 billion) in payments to contractors to terminate long-term agreements at NEOM for the period 2026 through 2030, according to people familiar with the matter. The amount equals more than a third of the government’s projected 2026 budget deficit.

NEOM’s budget for the same five-year period includes 40 billion riyals for new development, mostly tied to the OXAGON industrial city and utilities.

The kingdom has spent $64 billion on NEOM so far. 4 billion green hydrogen project at OXAGON is nearing completion, and the port there has become an important logistics node after the effective closure of the Strait of Hormuz. NEOM still plans to spend the 40 billion riyals on infrastructure intended to attract data centers and manufacturing facilities.

The Line project consists of a pair of mirrored skyscrapers running from the coast into the desert. NEOM also halted work on MAGNA, a string of Red Sea coastal resorts spanning 120 kilometers, and TROJENA, a mountaintop winter sports destination once eyed to host the 2029 Asian Winter Games.

A luxury yacht resort island called Sindalah was closed soon after its 2024 launch party and remains closed.

Last month NEOM canceled a contract with Spain’s Webuild for a high-speed rail line. 7 billion contract with Webuild as well as deals with Malaysia’s Eversendai Corporation and South Korea’s Hyundai Engineering & Construction. The final cancellation costs may change depending on negotiations with contractors.

Aiman Al-Mudaifer took over as chief executive of NEOM last year. A strategic review launched after his appointment has led to layoffs and corporate restructuring. NEOM did not respond to requests for comment.

Public Investment Fund governor Yasir Al Rumayyan said in April that no projects had been canceled and that the fund was reprioritizing spending under its new 2026-2030 strategy. NEOM is controlled by the kingdom’s sovereign wealth fund. Crown Prince Mohammed bin Salman unveiled the NEOM development nearly a decade ago, when it was projected to cost more than $1 trillion.