NEOM megacity project appears to be one of the crown prince’s highest priorities, and the Saudi state is devoting immense resources to making it a reality.
But five years in and with little progress in sight, cracks are appearing in Crown Prince’s flagship project to diversify the oil-driven Saudi economy. However, huge amounts of money are still spent on the unreal project.
Top secret sources revealed that Saudi Crown Prince Mohamed bin Salman (MBS) held several meetings with senior Saudi officials to contract with a Chinese company to purchase taxi drones to be used in NEOM Desert City.
MBS ordered the purchase of 25 flying taxis from China as a first batch, with the rest of the order being completed. There will be 100 flying taxis in 2026, with a cost of $2.5 billion.
NEOM, a $500 billion city project first launched by MBS, has aligned with metaverse firm Animoca Brands to consult on blockchain use cases.
Animoca Brands, a leading blockchain gaming and metaverse investment company, announced a strategic alliance and investment deal with NEOM to advance adoption of crypto technology in the Gulf region.
NEOM’s investment arm will also invest $50 million into Animoca Brands, pending finalization of agreements. According to the release, Neom will spend $25 million on convertible notes direct from the firm and spend another $25 million buying up Animoca shares on the secondary market.
This came as MBS plans to raise $11 billion from a syndicated loan as he seeks to finance his failed projects including NEOM, well-informed sources revealed.
According to the sources, the 10-year loan is offering an interest rate of 100 basis points over the Secured Overnight Financing Rate — the usual reference rate when borrowing in dollars.
The sources further noted that the Industrial & Commercial Bank of China Ltd (ICBC) is the coordinator and bookrunner for the long-term senior unsecured loan, saying that it has invited other banks to participate in the loan and has asked interested parties to respond before mid-October.
Reuters earlier revealed that Saudi Arabia’s $620 billion sovereign wealth fund, the Public Investment Fund (PIF), is expected to tap international debt markets for a debut green bonds issue as soon as next week.
Reuters reported in July last year that PIF was setting up a financing framework that would allow it to raise green bonds.
The loan aims at filling the hole left by the delayed listing of state energy group Saudi Aramco and providing financing for crown prince Mohammed bin Salman’s ambitious projects.
As many as 16 banks are expected to participate in the syndicated loan.
The borrowing of Saudi Arabia’s $620 billion Wealth Fund comes even as the state faces a surplus due to high oil prices.
In 2022, Saudi Arabia’s PIF reported an $11 billion investment loss.
Headed by MBS, the PIF did not report such a loss in its accounts for 2022, the year in which the same index fell by nearly 20 percent.
The Saudi PIF has recently made headlines after announcing a deal to merge the LIV golf tournament with the PGA Tour, as part of MBS’s sportwashing policies.
At home, the PIF supports large projects supervised by MBS, such as the $500 billion NEOM project and the Qiddiya entertainment city.
Abroad, the PIF owns stakes in major international companies, including a stake of $8.9 billion in the electric carmaker Lucid, which incurred losses following MBS’s partnership deal, and another stake of $3.2 billion in the video game company Activision Blizzard.
However, the PIF was subjected to severe blows and successive losses.
Lucid Group Inc stock is down 66% over the past year and gets a Bearish rating from Investors Observer Sentiment Indicator.
This came shortly after PIF held nearly 65% of Lucid’s common stock.
Sources familiar with the matter said that MBS is really furious over the decline, especially after he recently decided to increase its Lucid stake by 9.2% to 1.11 billion shares.
Experts have warned that the sharp decline in foreign investments by 85% in just one year is a real disaster that proves that foreign investors do not trust the projects launched by the Crown Prince.
Efforts to attract inward investment have been hampered by the clampdown on senior business executives and other figures in 2017 – billed by the authorities as an anti-corruption drive.
This huge spending on sportwashing while Saudi Arabia’s unemployment and poverty rate continue to rise, sparks widespread controversy at home and abroad.
Since taking office, MBS has done nothing worthful for the Saudi society but wars and crises. In contrast, Saudi Arabia has witnessed an unprecedented economic and political crisis.
In a failed attempt to cover up his failure, MBS has declared several projects to whitewash his dark reality.
Since 2021, MBS declared a series of fake projects that will never see the light of day.
