Vic convention centre extension

Melbourne's exhibition centre is to be extended to include more event space, a hotel, parking and more shops.

The Victorian government is negotiating with a private operator to expand the South Wharf building, and will contribute up to $350 million.

Premier Denis Napthine said on Friday the centre was turning away business due to limited space.

"Business events generate economic benefits of around $1.2 billion each year to Victoria," he said.

Opposition spokesman Martin Pakula was sceptical of the plans.

"If the government was serious about this, they would have entered into these contract negotiations months and months and months ago, not just over a week before they go into caretaker mode," he told reporters.

The expansion is expected to be complete by 2020.