New cash fears over Greenwich exhibition

The planned Millennium Exhibition is in trouble once again because the organisations charged with developing the site at Greenwich in south- east London cannot agree how best to proceed, raising fears it may not be ready on time, and the final bill could be way over the original pounds 500m budget.

British Gas, which owns the land, English Partnerships, the government agency responsible for redeveloping old industrial sites, and the Millennium Commission, which is donating pounds 200m of National Lottery cash to the exhibition, are at loggerheads and have yet to form a joint-venture agreement.

All three have taken different positions, safeguarding their individual interests. British Gas is paying pounds 50m to clean up the former gas-works site and build a new Jubilee Line Underground station; English Partnerships is keen to ensure the whole peninsula - not just the exhibition ground - is available for businesses and prospective employers after 2000; and the Millennium Commission is anxious to press ahead with organising the huge event.

As a result, sources close to the project confirmed, little has been agreed so far and the timetable is in danger of slipping. Sponsors complain they are still in the dark over the exact plans for the exhibition, how the road links to a notoriously difficult-to-reach area of London will be built, and what they will be left with once the celebration is over.

British Gas is understood to be reluctant to offer any commitment to provide lasting buildings, arguing the exhibition site will revert to its control.

"It's a difficult commercial negotiation to ensure everyone gets the very best out of it," said a project insider. "Everyone is negotiating very hard."

Those in charge of forming an operating company to run the exhibition are said to be frustrated at the lack of progress.

Concern is rising that the final bill could soar, to as much as pounds 1bn. The commission has already received one warning from Imagination, the exhibition's designers, that the bill could climb to pounds 800m. The claim, made in a leaked letter from Gary Withers, the head of Imagination, was dismissed within the commission as a softening-up exercise, to extract more cash. Others, though, said that Mr Withers' prognosis was accurate and may, if anything, be on the conservative side. Any lengthy delays, they said, could push his predicted total even higher. Cleaning-up the site is also proving more difficult than originally supposed.

One of those closely involved in planning the celebration said it was time for Michael Heseltine, the Deputy Prime Minister, who has made the event something of a personal crusade, to knock heads together and take firm charge.

British Gas denied any slippage was their fault. "We are continuing our discussions, we are exploring lots of options and we are being as flexible as we can be," said a company spokesman.