80,000 Nepali workers at risk as Saudi Arabia’s $9 Trillion NEOM Megacity faces massive scale-back and uncertainty

KATHMANDU: Thousands of Nepali migrant workers are facing an unexpected future after Saudi Arabia started cutting back and canceling major contracts for its ambitious mega-city project, NEOM. Ground estimates from labor communities suggest that nearly 80,000 Nepalis employed across various construction sites are caught in this sudden employment crisis.

The Ground Reality

While the Saudi government maintains that the massive project is only being “re-prioritized” and not completely shut down, the situation on the ground tells a very different story. Massive labor camps that once housed tens of thousands of workers are rapidly emptying out.

Major international construction companies have officially ended their contracts, leading to immediate job cuts:

• The Ski Village Project: Malaysian firm Eversendai terminated its contract for the Trojena Ski Village. Workers reported that out of 3,000 Nepalis on this site alone, the vast majority have already been sent back home.
• Tunneling and Dams: Major multi-billion dollar contracts held by Italian company Webuild and South Korean giant Hyundai Engineering have also been canceled, stopping work on underground transport networks and artificial lakes.

Why is the Project Slowing Down?

The sudden halt comes as Saudi Arabia faces immense financial pressure. Falling oil prices and skyrocketing cost estimates—with some internal audits suggesting the famous 170-kilometer city, The Line, could cost trillions of dollars—have forced a reality check. Consequently, the kingdom is shifting its financial focus toward more immediate goals, such as hosting the 2030 World Expo in Riyadh and the 2034 FIFA World Cup.

The Impact on Workers and Nepal

For the workers, the dream of building the “city of the future” has ended abruptly. Many are being sent back to Nepal on unpaid leave or with canceled contracts, often months before their agreements were set to expire. This is forcing many individuals back into debt, as they had taken out loans to secure these jobs in the first place.

The crisis also poses a significant threat to Nepal’s economy. Financial experts warn that if all affected workers are forced to return, the country risks losing over Rs 2.36 billion per month in global remittances. Currently, Nepali authorities note that while workers are returning daily in large groups, there is no official government record tracking the exact number of returnees.

Project details

Saudi Arabia’s flagship megacity project, NEOM, is now projected to cost nearly $9 trillion and could take more than 50 years to complete, according to findings from an internal audit.

The Wall Street Journal (WSJ) reported that an internal review presented to NEOM’s board last summer concluded the project is facing far longer timelines than originally planned and is increasingly straining financial resources due to persistent delays and budget overruns.

Originally estimated at around $500 billion, the revised projection in the audit has surged to approximately $8.8 trillion. The report also suggests that full completion could take an additional 55 years.

If accurate, the total cost would exceed 25 times Saudi Arabia’s annual state budget and far surpass the size of the kingdom’s sovereign wealth fund, the Public Investment Fund (PIF), which is valued at about $925 billion.

The audit further indicated that the major cost discrepancies stemmed from overly optimistic and unrealistic assumptions embedded in NEOM’s business planning. It alleged that certain executives may have deliberately adjusted projections to justify higher spending, citing what it described as “evidence of deliberate manipulation” by “certain members of management.”

The report also highlighted that some contracted firms benefited significantly from the project’s structure. Consulting giant McKinsey & Company was cited as an example, reportedly earning more than $130 million annually for its advisory role in NEOM’s planning and execution.

The findings come amid growing scrutiny of NEOM, which in recent years has faced leadership changes, funding constraints, scaled-back development plans, and ongoing criticism related to governance and human rights concerns.