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Old 04-07-2016, 04:36 AM   #1
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Welsh Government says it cannot underwrite Circuit of Wales

But the project will continue with further negotiations

Welsh Government says it cannot underwrite Circuit of Wales

THE Welsh Government has said that it cannot underwrite the £357m of Circuit of Wales but although the future of the project now looks uncertain, CEO Michael Carrick has said that the project will continue with further negotiations.

After taking legal advice, Edwina Hart MP has said that there is an ‘unacceptable risk’ for the Welsh government to underwrite the project.

A decision on whether the investment of taxpayers’ money into the project is classified as state aid was expected earlier this week. Using taxes in this way is illegal under European Union Law, but lawyers for the Circuit of Wales had maintained that the circuit could provide up to 6,000 jobs in the area.

Hart’s reluctance to sign-off the project could result in it collapsing.

In conjunction with the Circuit of Wales, the government has been working to find a workable solution, so far without success, but has said that it will support the project if new investors can step in.

An open letter from Hart to Welsh First Minister Carwyn Jones, Hart said:

‘As you will be aware we have been working to support this project for a significant period of time and have already in effect spent around £9m in support of its development. We also explored sharing the risk with several local authorities, and as you are aware that option also failed unfortunately.

‘In these last few days we have considered that a guarantee of 80% of the total value of the project may have reduced our risk to an acceptable level, but the circuit have not been able to secure any real private risk capital and so this option has not been possible.’

Ministers had agreed to provide a grant of £16m to support the jobs created by the Circuit of Wales but negotiations began to stall once the Welsh Government was asked to provide financial guarantee to the funding from Aviva, which is privately backing the scheme.

Michael Carrick, CEO of Heads of The Valleys Development Company which is behind the project, has confirmed talks with the Welsh government and Aviva will continue with the plan now delayed.

‘We respect and understand the minister's decision on the support for a 100% guarantee for our private funding,” Carrick said. “While this was our clear preference 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.

‘We will continue negotiations with the Welsh Government, the local authorities and Aviva Investors to advance the development on revised terms that will be acceptable to all parties.’

The Circuit of Wales has secured a five-year deal with Dorna which began last year. Dorna had originally hoped to move the British MotoGP to Wales in 2017 but after delays in confirming financial backing MotoGP had been delayed, with the Welsh circuit was expected to take over hosting duties in 2018.

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