Cancellation would be an embarrassing blow for officials because the Government is still chasing a $1 million loan it gave to organisers of a failed attempt to stage a similar race last year.

Last month, co-organisers CSS International and tourism officials launched the $12 million race in a blaze of publicity, saying it would attract 500,000 spectators and a global TV audience of millions.

But yesterday Mr Mann said: 'We may still be able to go ahead but clearly this is a problem, especially at this late stage. A final decision is going to have to be made within the next two weeks.'

Co-organiser, UK-based Supercatz Promotions Limited, is understood to be in dispute with the American Powerboat Association, which was supposed to be co-ordinating the organisation and safety of the event, which would require the harbour to be closed for up to two hours.

Many of the competitors were supposed to have been coming from the US, but it is not now clear who will now come and at what price.

'We are slightly disturbed because the two [powerboat] organisations are at each other's throats and we are caught in the middle of the whole thing,' Mr Mann said.

'If it doesn't go ahead - and we still hope it will - the only people out of pocket will be CSS.

'The Government at one stage was intending to give a grant of $8 million from the International Events Fund, but over the last few weeks due to this that has not gone ahead.'

Mr Mann added: 'We've done a huge amount of work so far. We have had three or four major government meetings. We sent our police and fire services to Florida last weekend to look at the Powerboat Grand Prix run by the American association.'

Karen Loh, of CSS International, said: 'Organising something on this scale is a very big task, and, yes, there are issues which need to be addressed, but we hope things can be sorted out by the end of the month.'