The government is about to spend more than $2.5 million of taxpayers' money building an abattoir for a disaffected Saudi businessman.

The kit-set abattoir is part of the Government's $12m attempt to appease him.

Photo: AFP / FILE

It has already given the influential businessman, Hamood Al-Ali Al-Khalaf, $4m and has flown 900 pregnant sheep to his farm - nearly all the lambs subsequently died.

Mr Al-Khalaf has opposed New Zealand getting a free trade deal in the region.

The Economic Development Minister Steven Joyce said $2.6m will now be spent building Mr Al-Khalaf an abattoir.

The abattoir will be gifted to the Saudi government then installed on the businessman's farm in the Saudi desert, which the Government said doubles as a New Zealand agri-hub.

However, Mr Joyce said there was still no movement on a free trade deal with the Gulf states.

Photo: RNZ / Alexander Robertson

"Nothing more we can do about it until the GCC (Gulf Cooperation Council) agrees, we're just waiting at this point," Mr Joyce said.

Labour Party trade and export growth spokesperson David Clark said it was time the Government stopped pouring taxpayer money into the Saudi businessman's pocket.

"This whole programme has been an embarrassment to the government from start to finish, the minister needs to rule out any further development of his failed project.

"It is time New Zealand taxpayers had assurance that their money was not being frittered away frivolously to poor ends," Mr Clark said.

Executive director of Save Animals From Exploitation (SAFE) Hans Kriek, said animals were killed without pre-stunning in the Middle East, something that was illegal in New Zealand.

"The New Zealand government would be facilitating cruelty to animals, the type of cruelty that would illegal and punishable by jail terms in New Zealand."

The government has refused to rule out giving Mr Al-Khalaf more money, or sending more livestock to his desert farm.