A FRESH funding row has emerged over the future of the Circuit of Wales project, and the company chosen to carry it forward.

The much anticipated scheme has endured a rollercoaster journey so far, first withstanding a public enquiry and then stumbling through numerous financial hurdles.

Most recently, revised funding proposals were rejected for failing to represent "value for money".

Now, the Conservative party has questioned whether the Welsh Government should have chosen the Heads of the Valleys Development Company (HOTVDC) to deliver the £370 million scheme.

Following receipt of a letter from economy minister Ken Skates said to confirm that a £7.3 million loan guarantee from the Welsh Government was used 'to pay the company's creditors', party leader Andrew RT Davies said yesterday: “The Circuit of Wales is a fantastic opportunity not only for the South Wales Valleys, but for Wales more generally; and yet this casts more doubt over whether the Welsh Government has picked the right company to carry this vital project forward."

The Welsh Government has confirmed the £7.3 million loan, but says it can recall the investment from the company if it defaulted.

The HOVDC, meanwhile, has said that the money will be repaid to the government on completion of the project, with interest.

But Mr RT Davies added yesterday that "doubts as to the financial viability of Heads of the Valleys Development Company are mounting".

"In light of this latest revelation, one really has to ask why it was unable to pay its creditors," he said.

“Given so many millions of pounds in public money has already been spent on the project, the Welsh Government must reveal if it is a guarantor to any more outstanding loans.

“It is vital that the government sees this project through to the end, but it is equally vital that the public receives assurances over how effectively its money is being spent, and whether the project will in the long run bear any fruit.”

The project's financial woes began in April, when the former economy minister Edwina Hart announced that the government could not underwrite the full £357m needed to carry out the project, owing to an ‘unacceptable risk’.

A Welsh Government spokesperson said yesterday: “This £7.35m loan guarantee was granted to enable the Heads of the Valleys Development Company (HOVDC) to further develop its project so they could take it to market with a view to securing necessary private investment.

“It was granted in line with Welsh Government processes and procedures and agreed on the understanding that if the loan was defaulted on, we would be able to take steps to recall our investment from the company.

“The Welsh Government has not guaranteed any further loans for HOVDC.

“In July the Economy Secretary, Ken Skates made clear that before the Welsh Government could commit any further public support to this project, it would expect to see at least 50 per cent of the financial risk being borne by the private sector.

“We look forward to receiving a revised funding application from HOVDC.”

A spokesman from HOVDC said: “The payment ensured that work on this project which, on completion, will provide significant economic opportunities to all of Wales, moved ahead.

“On successful financial completion this sum will be repaid to the Welsh Government with interest.”

He added that guarantee was used to pay external subcontractors and advisors, and assembly members were made aware of the situation during a session in August, and again during a briefing earlier this month.