French energy giant EDF has been dropped from Saudi Arabia's troubled Neom megaproject as the kingdom scales back its futuristic desert city amid safety concerns, technical challenges and ballooning costs.
EDF, a leader in hydro-electric technology, won the tender in January 2024 to carry out preliminary studies on the conception and construction of a hydroelectric power plant in Saudi Arabia's futuristic megacity in the desert, known as Neom.
But the Saudi authorities have quietly cancelled the contract, an investigation by Radio France revealed on Tuesday.
The kingdom informed EDF in March that they no longer required the hydroelectric plant. Instead, Neom officials said that "a mix of photovoltaic panels, wind power and batteries should suffice" to power the reduced development.
Launched in 2017 as part of Crown Prince Mohammed bin Salman's flagship Vision 2030 project, Neom is set to include a 170-kilometre linear city called The Line, a luxury island resort on the Red Sea (Sindalah) and a ski resort to host the 2029 Asian Winter Games.
As the original anticipated cost of $500bn exploded to an estimated $8.8 trillion, Bloomberg reports that The Line has now been reduced to just 2.4 kilometres.
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'Good' or 'depressing' news
At EDF's hydraulic engineering centre in La Motte-Servolex, Savoie – where 30 to 40 employees had worked on the project for several years – staff expressed mixed feelings. "This abandonment is good news because employees will no longer be at odds with this project," said Florian Chollet, a CGT union rep at EDF Hydro.
Some EDF employees had already expressed discomfort over the Neom project. "You play golf and organise Winter Games in the middle of the desert" they told Radio France in 2024, viewing the project as contrary to the company's commitments to promoting sustainablity.
However, certain engineers regretted losing the technical challenge of building a hydroelectric plant in the Saudi desert – pumping seawater, desalinating it, and transporting it via a pipeline to the desert location.
"Some staff spent three or four years on this project. Overnight, it stops without warning. That can be violent and depressing," Stéphane Bon-Mardion, another CGT representative at EDF Hydro, told Radio France.
EDF's management has yet to officially comment on the loss of the contract, but it was seen as providing the renationalised utility giant – saddled with a €47bn debt – a welcome boost.
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Safety issues
Neom is being built on the Red Sea in the Tabuk region in northeast Saudi Arabia on some 26,000km2 of land. The decision to scale it down reflects broader challenges.
With over 100,000 workers mobilised across an area the size of Belgium, the project has struggled with overcrowded camps, inadequate infrastructure, and multiple safety incidents, according to reports in The Wall Street Journal, which has described the megaproject as a "dystopia" in the desert.
In November 2024 five fatal accidents occurred at work sites and on roads within the project area. Independent reports commissioned by Neom in 2022 highlighted the absence of a comprehensive emergency plan and insufficient resources to handle the scale of the project.
According to the Financial Times, Neom’s new acting CEO, Aiman al-Mudaifer, appointed in November following the departure of his predecessor, has launched a "comprehensive review" of the project’s scope and priorities. The review is taking place "in an environment of limited resources," as Saudi Arabia recalibrates its spending amid falling oil prices and the vast scale of Vision 2030 commitments.
Despite such setbacks, Crown Prince Mohammed bin Salman appears determined to continue with a scaled-down version of Neom. The project, owned by the kingdom's $940-billion sovereign wealth fund, remains central to Saudi efforts to diversify away from its dependency on oil.
