Neom cancels rail link between Oxagon and The Line

• $1.6bn contract with Italy’s Webuild
• 20% of work completed
• Follows dam contract cancellation

Saudi Arabia’s Neom giga-project has terminated the contract to build a high-speed rail line connecting Oxagon, its port and floating industrial zone, with The Line, the zero-carbon linear city.

A €1.4 billion ($1.6 billion) contract was awarded to Italy’s Webuild in May 2023 to design and build the 57km stretch of high-speed railway.

Webuild confirmed the termination in a statement on Friday. Neom did not respond to an AGBI request for comment.

The decision follows the March termination of Webuild’s contract to build three dams to create a freshwater lake at Neom’s Trojena mountain destination.

Neom has exercised its right to cancel the deal for the high-speed line connector project in Sharma along the northern coast of the Red Sea, the statement said. The termination will take effect from May 27.

As of that date, 20 percent of the project work is complete, with the residual backlog at €1 billion.

“For this project, which had already been suspended, no revenues were expected for the current year,” the Italian contractor said.

All costs incurred up to the effective date of termination and those related to the early contract halt, including site disengagement and demobilisation, will be reimbursed by Neom.

Webuild confirmed all its activities for Neom have concluded following the cancellation of the latest contract.

The Italian company will be “unharmed” by the termination, the statement said. Its construction backlog, net the residual activities related to the high-speed line contract, remains above €50 billion.

Further reading:

• Everything you need to know about Saudi Arabia’s giga-projects
• PIF sets new five-year strategy to drive returns
• How Saudi Arabia can avoid World Cup ‘white elephants’

Riyadh has been reviewing giga-project spending since 2024, after years of heavy outlays ran into rising costs, execution hurdles and lower crude prices – exposing international contractors to cancellations.

The kingdom has indicated an intention to increase borrowing to fund Vision 2030 development projects. The finance ministry budgeted for a SAR165.4 billion ($44 billion) deficit in fiscal year 2026.

Neom, backed by the $1 trillion Public Investment Fund, is the centrepiece of Crown Prince Mohammed bin Salman’s Vision 2030 plan to diversify the economy away from oil and attract foreign direct investment.