Welsh Assembly economy minister Edwina Hart has refused to underwrite the Circuit of Wales project, saying that it was an ‘unacceptable risk’ to the government in light of the "significant question around the viability of the project.”
The news comes a severe blow to the project, and may put into question the £350 million of backing supposedly pledged by insurance giant Aviva.
However, Minster Hart says in a letter to the Welsh First Minister, believed to have been prompted by legal advice on the legalities of state aid, that she does not believe it would be a sound move for the Assembly to back the project.
"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."
It is not yet understood how the decision to withdraw underwriting affects the £30 million in state funds the project had also requested, which have until tomorrow until be approved before the Assembly breaks for the upcoming elections.