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Saudi Arabia is scaling back plans to build 81 luxury resorts on the Red Sea by 2030, as the kingdom rethinks the multi-billion-dollar mega-projects meant to reshape its oil-reliant economy.
Stubbornly low oil prices and patchy demand have forced a rethink of the flamboyant "giga-projects", centrepieces of Crown Prince Mohammed bin Salman's Vision 2030 programme to diversify Saudi Arabia's economy.
Red Sea Global (RSG) denied plans to downsize, saying the project would continue after the initial phase of 27 resorts is completed this year.
But sources with knowledge of the plans said construction would halt at the end of 2026, costing dozens of jobs at RSG and hundreds at contracting firms.
The sources spoke on condition of anonymity due to the sensitivity of such projects.
"A decision was taken to stop work on Phase Two of the Red Sea projects," a senior RSG employee told AFP.
"Current operating costs exceed revenues in a way that has become unsustainable," another source with RSG added.
Seven sources at RSG, other giga-projects and related companies and consultancies said the Red Sea construction would be put on pause.
RSG disputed their account, insisting that several resorts were in the pipeline for the second phase.
"As with any large-scale, long-term destination, Phase Two is being delivered through a sequenced approach," RSG said in a statement to AFP.
"Several projects are currently in design development, approvals, and commercial structuring, which is exactly where they should be at this stage."
Government officials acknowledge a pullback in the sprawling giga-projects after Saudi Arabia also took on board the large-scale infrastructure commitments of Expo 2030 in Riyadh and the 2034 World Cup.
"Some (giga-projects) will be scaled down. Some will be delayed," Finance Minister Mohammed al-Jadaan told AFP last month in Davos.
Low oil prices are also impacting Saudi budgets. Profits have fallen for 11 straight quarters at Saudi Aramco, the world's top oil exporter and the country's main earner.
"The consensus is that it's impossible to work on all these projects at the same time," an official at a company backed by the country's wealth fund told AFP.
"It was believed that the Red Sea project would attract more capital and generate huge returns, and that it would eventually become financially sustainable," another source working with a government project added.
"But this never happened."
The Red Sea developments include Amaala, envisaged to stretch along 68 kilometres (42 miles) of coast and cover 4,155 square kilometres (2,582 square miles), with 30 resorts and a yacht club all powered by renewable energy.
Further south, the Red Sea Project has an international airport and plans for 50 resorts, some of them on three islands.
Just north of the two sites lies another giga-project: Neom, the futuristic new city whose ambitious design is reported to have hit major problems.
The downscaling is a blow to Saudi Arabia's hopes of transforming its Red Sea coast into a major destination for wealthy tourists and of competing with the likes of the Maldives.
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