Neom cancels $5bn Trojena dam and lake contract

• Contractor Webuild confirms termination
• Second Trojena cancellation this week
• Project was 30% complete

Saudi Arabia’s Neom giga-project has terminated the contract to build three dams to create a freshwater lake at the Trojena mountain destination.

The contract was awarded to the Italian contractor Webuild in January 2024 as part of a $4.7 billion infrastructure development contract.

Webuild confirmed the termination of the contract in a statement.

“Neom has exercised the termination for convenience for the construction in Trojena (Saudi Arabia) of a system of three dams designed to feed a freshwater lake, as well as the architectural structure The Bow,” the company said.

The termination will take effect on March 29. 

Work on the project is almost 30 percent complete, the statement said, adding that the remaining project backlog stands at €2.8 billion ($3.2 billion).

Costs accrued up to the effective date of the termination, as well as those related to the early termination of the contract, including site disengagement and demobilisation activities, will be reimbursed by Neom.

Webuild will be “unharmed” by the termination, the statement said. Its construction backlog, net of the residual activities related to the Trojena contract, remains above €50 billion.

The company statement confirmed that Neom has “exercised termination with respect to other contractors for other works in the area (Trojena)”.

The dams were intended to create a 2.8km-long freshwater lake at Trojena, which was slated to host the 2029 Asian Winter Games. Saudi Arabia pulled out of hosting the event in January.

Neom has already served a termination notice to Eversendai Corporation Berhad for the structural steel contract at Trojena ski village. 

Two weeks ago it cancelled a tunnelling contract worth roughly $1 billion at the heart of its flagship development The Line.

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

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The Iran-Israel war has compounded that pressure, disrupting shipping in the Strait of Hormuz and constraining crude exports from Saudi Arabia, even as Brent surged towards $120 a barrel before easing to around $100. 

Neom, the $500 billion giga-project that is 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.

Webuild is constructing 57km of the Connector high-speed railway line between Oxagon and The Line in Neom. It is also working on line 3 of the underground metro in Riyadh, which, at 42km, will be the longest line in the Saudi capital.