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Saudi Arabia’s megaproject NEOM has attracted an investment of $5.6 billion from local investors. According to Bloomberg, four local firms will build temporary housing and construction facilities for some 95,000 workers in a public-private partnership deal.
The futuristic city, a plan from Saudi crown prince Mohammed bin Salman will be built on 10,200 sq. miles of desert and Riyadh is planning for it to become the "world's most ambitious tourism project.".
To diversify its economy, Saudi Arabia is also looking for the city to become a testbed for new technology. According to its website, the city plans to become a world leader in 5G hyperconnectivity, Data Centers, AI and advanced robotics and augmented, mixed and virtual reality. In order to power the city, Saudi officials are making a big bet on green hydrogen. Last month, NEOM announced the financial close of what is currently the world’s largest green hydrogen plant. The $6.7 billion dollar facility built by ACWA Power, Air Products and Chemicals, Inc., and NEOM Company is set to start production as soon as 2026.
Despite some progress in the last couple of months, critics continue to question the financing of the city and the feasibility of the city as a whole. As it stands, the Kingdom plans to finance the initial phase of the city through its sovereign wealth fund, which is slated to cover half of the budgeted sum of $320 billion, with a mix of both private and public investors expected to cover the other half. Saudi Crown Prince Mohammed bin Salman has also floated the idea of an IPO in 2024. In November 2022, Saudi Arabia said it was working with financial advisor and asset manager Lazard to explore the options of international debt sales or and IPO on the Saudi Tadawul stock exchange.
By Tom Kool for Oilprice.com
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Tom majored in International Business at Amsterdam’s Higher School of Economics, he is Oilprice.com's Head of Operations