An art festival in Nagoya featuring a controversial exhibit of a statue symbolizing “comfort women” will not receive a state subsidy due to procedural errors, the cultural agency said Thursday, a day after the governor of Aichi said the prefectural government is hoping to reopen the exhibit.

The Cultural Affairs Agency said it will not pay a ¥78 million grant to the Aichi Triennale 2019 held in Nagoya as it was not informed in advance that the exhibit, part of the festival, could trigger an outcry that would jeopardize the event’s smooth operation.

Comfort women is a euphemism used to refer to women who provided sex, including those who did so against their will, for Japanese troops before and during World War II.

The exhibit “After ‘Freedom of Expression?'” was closed three days after the Aug. 1 opening over security concerns due to multiple threats to the festival, which will run through Oct. 14.

“The issue is not about the exhibit content but about the procedure,” a source close to the agency said.

According to the Aichi Prefectural Government, the total operating cost of the festival is about ¥1.2 billion, with the prefecture set to shoulder around ¥600 million and the city of Nagoya about ¥200 million.

The rest was supposed to be funded by the ¥78 million state subsidy, corporate sponsorships and entrance fees.

Aichi Gov. Hideaki Omura expressed his intention on Thursday to bring the case to a panel to resolve disputes between the central and local governments.

“We will have to hear what rational reason the agency will give (for the decision on the grant) at the dispute resolution panel,” he said.

In April, the agency picked Aichi Triennnale as a potential recipient of its subsidies, but a formal decision had yet to be made. It had looked into the grant application process since the cancellation of the exhibit following a barrage of phone calls and protest messages that marred the operation of the event.

The agency concluded there were inadequacies in the procedure as the Aichi government failed to provide necessary information when applying for the subsidy, even though it had expected the exhibition could stir protests.

On Wednesday, Omura said the Aichi government aims to reopen the exhibit after receiving a proposal from an expert panel earlier in the day. Omura stopped short of saying when the exhibition could be reopened.

The governor serves as chairman of the steering committee of the Aichi Triennale festival.

The exhibition opened at a time when relations between Japan and South Korea have hit their lowest level in years in disputes over wartime history and trade policy.

An interim report by the six-member panel, released Wednesday, said the exhibit “should be reopened as quickly as conditions are met.”

Such conditions include mitigating risks of attack and threats on organizers by phone calls and fax, improving the setup and explanations of the exhibited items, and banning visitors from taking photos and sharing them on social media.

The report said there was little choice but to cancel the exhibit because of imminent dangers. The cancellation therefore “did not amount to an unjust restriction on freedom of expression,” the report added.

“It was inevitable that the exhibit would meet a backlash as the notes on the work were insufficient,” the report said, attributing the confusion to Daisuke Tsuda, the festival’s artistic director, who it said ignored cautious views and insisted on holding the exhibit.

At a separate news conference in Nagoya on Wednesday, Tsuda said he will accept what the report says and take it seriously. “I was a little too rash and eager,” Tsuda said.

Tsuda also said he will remain artistic director but will focus on work behind the scenes.