Wall Street Journal: Internal report reveals problems in Saudi Neom project
The Wall Street Journal, said that an internal report on the Saudi Neom project revealed problems that the project faced.
The WSJ added that a mutual illusion caused these problems, pushing the Saudi crown prince toward imaginative plans while his executives didn’t reveal the full extent of the challenges and costs.
The Wall Street Journal reported details of the more than 100-page report, which is an internal review presented to Neom board members last spring, in addition to statements from former employees of the project.
The report concluded that executives, with the help of long-time project consultants McKinsey & Co., inserted unrealistic assumptions into Neom’s business plan to justify the exorbitant cost.
The review found evidence of deliberate manipulation of financial matters by some members of the administration, according to WSJ.
In a sign of the project’s massive ambitions, a board draft presentation last summer put the capital spending required to build Neom to its final state by 2080 at $8.8 trillion, more than 25 times Saudi Arabia’s annual budget, and $370 billion for the first phase by 2035.
Saudi Arabia is funding the bulk of Neom’s initial costs, although officials hope private investors will eventually share the burden.
The Neom spokeswoman said that the Wall Street Journal was “misinterpreting and distorting the numbers” and declined to provide further details.
She added that “Neom champions excellence, professionalism, diversity and ethical behavior and has policies that require employees to uphold these values”.
“The project priorities are sound and the project remains on track, demonstrating tangible progress,” she said, adding that schedule and cost adjustments are common practice for large projects.
The Saudi government didn’t respond to the Wall Street Journal’s questions about Neom or the Crown Prince’s involvement in the project.
A McKinsey & Co spokesperson said the company ensures “compliance with the rules governing international trade”.
He noted that any allegation that she participated in manipulating financial reports is false.
The Neom project is a Saudi project for a planned city, launched by the Saudi Crown Prince, Prince Mohammed bin Salman, on October 24, 2017.
The project is located in the far northwest of the Kingdom of Saudi Arabia in the Tabuk Region, Duba Governorate, and extends 460 km along the Red Sea coast.
The project aims, within the framework of the ambitious aspirations of Vision 2030, to transform the Kingdom into a leading global model in various aspects of life.
The first phase of Neom will be completed by 2025, and the project is supported by the Saudi Public Investment Fund, worth $500 billion, and local and international investors.
