Saudi Arabia's NEOM Mega-Project Faces Scale-Back, Impacting Thousands of Nepali Workers

Kathmandu. Saudi Arabia has started cutting and canceling major construction contracts for its ambitious 'NEOM' mega-city project, putting the future of thousands of Nepali workers employed there in uncertainty. According to initial estimates from the labor community, approximately 80,000 Nepali workers employed at various construction sites are facing this sudden employment crisis.

Although the Saudi government claims the project is not being completely shut down but merely 'reprioritized,' the situation at the construction sites appears quite different. Large labor camps, once filled with thousands of workers, are now rapidly emptying. Immediate job cuts have begun after major international construction companies formally terminated contracts.

Malaysian company Eversendai has terminated its contract for the 'Trojeana Ski Village' project. According to workers, most of the 3,000 Nepali workers employed on that project have already been sent back to their home country. Similarly, contracts worth billions of dollars with Italian company Webuild and South Korean company Hyundai Engineering have also been canceled. Along with this, work on tunnel transportation networks and artificial lake construction has also stopped.

Why has the project slowed down?

Saudi Arabia is reportedly facing severe economic pressure. Falling oil prices and escalating project costs have forced the government to reconsider these projects. According to an internal audit report, the cost of constructing the 170-kilometer-long 'The Line' city could reach trillions of dollars. Subsequently, the Saudi government has shifted its economic priorities to focus on immediate projects like the 2030 World Expo in Riyadh and the 2034 FIFA World Cup.

An internal audit report indicates that the cost of Saudi Arabia's flagship mega-city project 'NEOM' is now expected to reach approximately $9 trillion, and its full construction could take more than 50 years. According to The Wall Street Journal, a report presented to the NEOM board last year noted that the project is significantly behind its initial schedule and costs are escalating.

The initially estimated cost of around $500 billion has now risen to $8.8 trillion. The report states that completion could take an additional 55 years.

If this estimate is accurate, the total cost of the project would be 25 times Saudi Arabia's annual national budget. This amount is also much larger than Saudi's sovereign wealth fund, the Public Investment Fund (PIF), which is valued at approximately $925 billion.

This highly ambitious project is now facing additional pressure due to leadership changes, lack of investment, scaled-back development plans, and criticism regarding governance and human rights.

Project scaled down, priorities shifted

Further construction of 'The Line,' a 170-kilometer-long twin skyscraper structure planned under the ambitious 'NEOM' project, has been postponed until at least after 2030. This project, once estimated to cost over a trillion US dollars, is now seeing Saudi's sovereign wealth fund reduce spending and focus on infrastructure development such as ports and data centers. In a conversation with The Times, a Saudi official said, 'We were moving at 100 miles per hour. Now we are in deficit. We have to change priorities.'

'NEOM,' being developed in the northwestern region of Saudi Arabia, is a company controlled by the Public Investment Fund (PIF), chaired by Saudi Crown Prince Mohammed bin Salman. Sources familiar with the matter indicate that NEOM has also pushed back plans for developing tourist destinations along the Red Sea coast until after 2030. Saudi officials believe the project needs to be reviewed due to high costs and changing geopolitical circumstances. So far, contracts for three major projects under NEOM, including the Ski Village, have been terminated.

Similarly, no new investment is expected in 'Trojeana,' a mountain resort planned to host the 2029 Asian Winter Games, before 2030. Currently, NEOM projects are prioritizing practical and productive sectors. NEOM plans to spend approximately $3 billion on the further development of 'Oxagon,' an industrial city on the Red Sea coast. Its port has become a crucial part of Saudi's strategy to build new trade routes after the Strait of Hormuz is closed.

Furthermore, to attract artificial intelligence (AI) related companies, the Saudi government is investing in expanding electricity, utility services, and data connectivity there to establish data centers.

These decisions are reportedly the result of a strategic review conducted after NEOM's CEO, Ayman Al-Muddaiif, was appointed last year. Along with the review process, NEOM has also significantly reduced its population target for 2030. Initially, NEOM officials envisioned 1.5 million people living there by the end of the decade. Two years ago, that estimate was reduced to 300,000. The current target is a maximum population of 100,000.

Impact on Nepali workers and economy

The future of many Nepali workers who went to Saudi Arabia with dreams of building a 'city of the future' and improving their livelihoods has become uncertain. Many are being sent back to Nepal on unpaid leave or with canceled contracts before their term ends.

As a result, many workers are once again burdened by debt, as they had taken loans to go to Saudi Arabia for employment. Experts warn that this crisis could also have a significant impact on Nepal's economy. If all affected workers return home, Nepal could lose over 2.36 billion rupees in remittances monthly, according to estimates.

Currently, according to Nepali officials, a large number of workers are returning daily, but there is no exact government record of those returning. Hom Karki, a Nepali journalist based in the Gulf, writes for the Kathmandu Post, 'Of the approximately 80,000 Nepali workers employed on this project, some have already started returning home. If all Nepalis return, there is a risk of losing at least 2.36 billion rupees in income monthly.'

According to Hom Karki, only the 3,000 Nepalis working on the Trojena project alone have lost about 180 million rupees in income monthly.

Not only Nepalis, but thousands of workers from countries like India, Bangladesh, Pakistan, and the Philippines have lost their jobs due to project cancellations. NEOM has not released recent data on the workers involved in the project. However, according to reports, approximately 140,000 workers were employed at various construction sites of this project in 2024. Nepali workers are the fourth largest group in Saudi Arabia. According to the final labor survey of 2025, there are about 3.4 million workers in Saudi's construction sector, of which 92 percent are foreign migrant workers. Among them, Indians are the largest (28 percent). Bangladeshis are 18 percent, Pakistanis 16 percent, Nepalis 9 percent, Egyptians 8 percent, Filipinos 4 percent, and workers from other countries.

The exact number of workers who will lose their jobs has not been officially disclosed. Companies exporting labor have not yet released such data. However, this project was very important in terms of income for the workers employed there, where Nepali workers were getting jobs with a minimum monthly salary of up to 60,000 rupees. But now they are forced to return home with an uncertain future.