Saudi Arabia is expected to spend around $16 billion on cancelling parts of its ambitious Neom megacity project over the next five years, a figure that reportedly exceeds spending on some of the developments being scrapped.

According to a report by Semafor, Neom’s budget includes 60 billion Saudi riyals ($16 billion) in anticipated payments to contractors linked to the termination of long-term agreements following a major scaling back of the project.

Launched by Mohammed bin Salman under Saudi Arabia’s Vision 2030 programme, Neom was envisioned as a futuristic development featuring coastal resorts, an industrial zone, a mountain ski destination and the flagship linear city known as The Line.

The Line, originally planned as a 170-kilometre city stretching across the desert, was significantly reduced in scope after rising costs and project delays prompted a strategic review.

The reported termination payments stem from penalty clauses in contracts tied to projects that have been cancelled or downsized.

The move reflects a broader reassessment of Neom’s scale and financial viability as Saudi authorities seek to manage escalating costs.

The Financial Times previously reported that officials were considering a much smaller version of the original vision, while several architects and urban planning experts questioned the feasibility of the project from both economic and planning perspectives.

Neom is estimated to have cost Saudi Arabia around $64 billion so far. The Line alone was previously projected to require an investment of roughly $500 billion.

The project underwent a strategic review after Aiman Al-Mudaifer took over as chief executive last year, leading to restructuring, layoffs and revisions to development plans, according to reports.