The Circuit of Wales was dealt a significant setback on Wednesday, after the Welsh Economy Minister refused to offer a 100% guarantee for the £357 million development project.
Without the guarantee, the future of the project is now uncertain, with doubts over the willingness of Aviva, a British insurance company, to continue with backing for the project.
After a long period of preparation, which included a Public Enquiry on the transfer of public lands, work was set to start on the circuit, set just outside Ebbw Vale in South Wales. Work had already started to get the site of the circuit ready to start construction.
The final piece of the puzzle had been secured several weeks ago, in the form of financial backing from Aviva. However, the Heads of The Valley Development Company had asked the Welsh Government to underwrite 100% of the investment in the project, with reports in the regional newspaper South Wales Argus suggesting that such demands had come from Aviva.
Welsh Economy Minister Edwina Hart wrote to the Welsh Assembly to inform its members that the Welsh Government could not underwrite the entire project cost. S
he wrote that there was “a significant question around the viability of the project” and that backing it was therefore an “unacceptable risk”. The offer of an 80% guarantee had not been accepted.
Speaking to BBC Wales, the Economy Minister said she had been advised the project was too risky to underwrite fully.
With Aviva refusing to underwrite 20% of the project, Hart told the BBC “there is no private money in this” and that therefore the risk would have fallen entirely on the taxpayer. This was not a good investment for the public purse, Hart said, telling the BBC “The advice to me was that it was not value for money, it was far too much of a risk for government.”
Without the backing of the government, it is unclear how the project will proceed. The HODVC are still confident of being able to complete the project, but must now embark on a mission to find alternative ways of securing the project.
In a statement, shown below, HODVC boss Michael Carrick said, “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.”
This article was originally published on MotoMatters, and is republished here on Asphalt & Rubber with permission by the author.
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