Image copyright Circuit of Wales Image caption A hotel and motor industries centre are part of the development

The Welsh Government has said it cannot underwrite the £357m Circuit of Wales project in Ebbw Vale.

The economy minister said there was a "significant question around the viability of the project" and an "unacceptable risk" to the government underwriting the entire project.

Edwina Hart said she had "reluctantly come to the conclusion" not to proceed with the guarantee after legal advice.

Insurance firm Aviva has been expected to back the project.

Michael Carrick, the CEO of Heads of The Valleys Development Company which is behind the project, said negotiations with the Welsh Government and Aviva would continue.

He said: "We respect and understand the minister's decision on the support for a 100% guarantee for our private funding. 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."

Media playback is unsupported on your device Media caption The economy minister tells BBC Wales she had to look at the risks involved in the Circuit of Wales project

Aviva's money would have allowed work on the track, which aims to bring thousands of bike fans for motor sport events like the MotoGP and employ up to 6,000 people in the south Wales area.

Ministers agreed to provide grant aid of £16m to support job creation if the project goes ahead.

But the sticking point came over the Welsh Government being asked to provide a financial guarantee to the privately-funded project.

Ministers took legal and financial advice, including from outside, and it was after final external advice that Mrs Hart made her decision.

Aviva would not comment.

'Sharing the risk'

Mrs Hart, in a letter to First Minister Carwyn Jones, 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."

Mrs Hart added that given the existing substantial investment in the project "it is important that we keep the door open to any new investors who might be able to take this project forward".

Sports car company TVR last month agreed to set up its new factory at Ebbw Vale near the planned circuit.

The town has had many millions spent regenerating it after the steelworks closed in 2002 but unemployment has remained high.