New Circuit of Wales funding plan submitted to Welsh Government
THE company behind the proposed £370m Circuit of Wales race track project in Blaenau Gwent has submitted a revised funding offer to the Welsh Government.
The new offer significantly reduces the required financial guarantee provided by the taxpayer.
Earlier this month the proposed project, which over time would also see a one million sq ft automotive and research and development themed business park, alongside retail and hotel infrastructure, was called into question when Business Minister Edwina Hart said that, due to state aid rules, she couldn’t sign off a 100% guarantee for the proposed investor behind the project Aviva Investors.
The financial services giant had in principle agreed to investment of £357m, providing there was a safety net 100% guarantee for the amount provided by the Welsh Government. The project is being driven by the Heads of Valleys Development Company (HoVDC).
It is understood a revised financial plan was earlier this week submitted by HoVDC to the Welsh Government which significantly reduces the required guarantee provided by the Welsh Government from 100% to around 50%.
While subject to legal interpretation the level of public sector guarantee for a project, without breaching state aid EU rules, has a ceiling of around 80%.
However, it is understood that the revised plan is also seeking an underwriting position for the proposed investment from Aviva from the local authorities of Blaenau Gwent and Monmouthshire – the two council areas in the region which stand to gain the most from the economic impact from the race track and associated projects.
When discussions between the local authorities and HoVDC broke down earlier this year, after the authorities took legal advice on state aid rules, HoVDC turned to the Welsh Government to provide a total guarantee to Aviva.
If minded, the Welsh Government and its Business Minister Edwina Hart, could still sign off the revised funding model for the project before next week’s Assembly Election.
However, in all likelihood, it will be a decision for the next Business Minister.
HoVDC said that during its construction phase alone the project would create 1,400 construction jobs and would use Tata-made steel totalling around 3,000 tonnes.
It said the project could directly and indirectly support 6,000 jobs over the long term.
The track itself is forecast to attract 750,000 visitors a year.
Also, as well as staging events such as the MotoGP Grand Prix from 2018, the motor track could be used as a testing facility for car manufacturers.
The business plan is that the circuit will make money all year round, whether being used by motor enthusiasts or for the staging of concerts.
So far the Welsh Government has provided project development funding of just over £9m to HoVDC.
HoVDC declined to comment.