FUNDING CRISIS END OF THE ROAD FOR CIRCUIT OF WALES?
Ambitious project on the ropes as Welsh government refuses to underwrite 100% of £357m investment
The planned development of the Circuit of Wales has been dealt a major blow following the Welsh governmentõs refusal to underwrite 100 per cent of £357.2m needed to start the project.
With private investor, the insurance giant Aviva pledging their support on the basis the project is 100 per cent underwritten by the Welsh government, Business Minister Edwina Hart has now back-tracked and said this level of government support would be a step too far.
Hart said: Òthe final official advice recommends that I should not agree to underwriting the £357.2m Aviva investment in the scheme for two reasons. First the significant question around the viability of the project and secondly the unacceptable risk to the Welsh government of, in effect, underwriting the entire project.ó
While it comes as a bitter blow to HOTVDC (Heads of the Valleys Development Company), there is still a hope that the project, which promises to bring a state-of-the-art racing facility to the UK, could go ahead.
While the government has refused to underwrite the development 100 per cent, they are offering to underwrite 80 per cent - leaving an estimated shortfall of £71.48m.
Car manufacturers Aston Martin and TVR have also confirmed they will relocate to the Ebbw Vale area.
Michael Carrick CEO of HOTVDC said: ÒWE respect and understand the Ministerõs decision on the support for a 100 per cent guarantee for our private funding. While this was our clear pref- erence and reflective of the negotiations we have held over the past six months, we accept that the project will need to progress on revised terms.
Òthe Circuit of Wales is a significant mixed-industry development with the potential to deliver widespread regeneration benefits to the South Wales region. Many observers near to the site will have noted that the pre-enablement works and ecology activity has already commenced and we have a range of contractors en- gaged on creating sustainable employment opportunities in this challenged area.
ÒWE will continue negotiations with the Welsh government, the local authorities and Aviva to advance the development on revised terms that will be acceptable to all parties.ó
While the controversial project now appears to have stalled completely, Hart maintains that the project remains viable Ð just not on the current terms.
She said: ÒI donõt take it (the decision) lightly as I have already spent £9m. However, I donõt think it is wasted as I do think there is a viable project that can be picked up there, but it will be have to be picked up by others.ó
‘Aviva’s support was on the basis it was 100% underwritten by government’