Saudi Arabia’s NEOM has terminated several construction contracts linked to the giga project in the first quarter of 2026, with the combined value of cancelled or affected works potentially exceeding $5 billion, based on disclosures by contractors including Italy's Webuild, South Korea's Hyundai Engineering & Construction and Malaysia's Eversendai Corporation.

The cancellations form part of a broader restructuring of project scope and phasing across parts of the Public Investment Fund (PIF)-backed NEOM development, with contractors saying the terminations were exercised by the client under contractual rights and will not result in financial losses after settlement of completed works.

Webuild’s Trojena lake and dam package

Italian engineering group Webuild said on Wednesday that NEOM has cancelled the contract for the construction of three dams and a 2.8-kilometre freshwater lake at the Trojena mountain tourism project, along with works related to The Bow, a hotel-residential structure overlooking the valley below the resort.

The contract, awarded in January 2024 and valued at about $4.7 billion, had reached roughly 30 percent completion at the time of termination, leaving a remaining backlog of about €2.8 billion ($3.24 billion) for the contractor.

Webuild said the termination will become effective on 29 March 2026, adding that the client has also exercised termination rights on other contracts in the same area.

Costs incurred up to the termination date, including demobilisation and site disengagement, will be reimbursed by the client, and the company said it will remain financially unaffected.

The Trojena works formed part of a wider NEOM portfolio that also includes Webuild’s contract for 57 km of high-speed rail between Oxagon and The Line, the company said.

Hyundai E&C tunnel contract

Earlier in March, South Korea’s Hyundai Engineering & Construction (Hyundai E&C) said NEOM had terminated a contract related to a tunnel package.

The contract, awarded in June 2022, covered the construction of a 12.5-kilometre twin-running tunnel between Wadi Sharma and Tabuk in northwest Saudi Arabia.

Hyundai E&C said the termination was requested by the client as part of a project reorganisation, with settlement for completed works finalised and no financial loss recorded.

Hyundai E&C was part of the SHAJV group, including Samsung C&T Corporation and Saudi Archirodon Company, which was awarded drill-and-blast tunneling contracts by NEOM in July 2022 to support high-speed and freight rail services.

In a related disclosure in July 2022, Hyundai E&C said its 35 percent share of the contract corresponds to about SAR 2.156 billion (equivalent to $575 million). The disclosed contract value was about 723.1 billion South Korean won. Based on the disclosure numbers, Zawya Projects has estimated the total value of the contract at SAR 6.16 billion ($1.6 billion).

NEOM had awarded a second tunnel work contract to the FCC/CSCEC/SAJCO JV, comprising FCC Construction, China State Construction Engineering Corporation and Shibh Al-Jazira Contracting Company. The status of that contract remains unknown. The total length of the tunnel work covered by the two contracts was 28 kilometres.

Eversendai steel package for Trojena Ski Village

Malaysia-listed Eversendai Corporation Berhad said on Tuesday it has received a notice of termination for the structural steel contract awarded to its consortium with Al Bawani Co for the Trojena Ski Village development.

The contract, awarded in March 2024, will be terminated effective 26 March 2026, the company said.

"We strongly believe that our fully substantiated claims shall be fairly compensated by the client," it said.

Although the contract value was not disclosed, Eversendai said its outstanding order book fell to 2.02 billion Malaysian ringgit ($506 million) after excluding the balance works for the Trojena contract, compared with about MYR 4.6 billion ($1.15 billion) in a February 2026 disclosure when that project was still included, which indicates that the NEOM package represented a significant share of its backlog.

The Trojena steel works contract was included in a group of projects worth MYR 5.4 billion ($1.35 billion at current rates) across Saudi Arabia, UAE and India. The scope included engineering, fabrication and installation of structural steel, as well as precast, concreting, metal decking and fireproofing works for one of the signature buildings in the Ski Village resort.

All the contractors involved in the terminated packages said the decisions were taken by the client under contractual provisions and were not linked to performance issues.

In February 2026, Reuters had reported that NEOM would shift away from its earlier emphasis on tourism and futuristic urban design toward renewable energy and industrial development under a strategy revamp.

(1 US dollar = 3.99 Malaysian ringgits)

(Editing by Anoop Menon) (anoop.menon@lseg.com) 

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