It was slated to become one of the next big cruise destinations for New South Wales, but the plan to build the long-awaited Newcastle cruise terminal has been decimated.

Earlier this week, Infrastructure NSW announced it had withdrawn $12.7 million to fund the new cruise terminal after the Port of Newcastle revised its construction plans due to rising costs.

“Infrastructure NSW has advised that the $12.7 million funding for the cruise terminal project is no longer available,” a press release from the Port of Newcastle said.

“Port of Newcastle has been working on this project on behalf of the NSW Government on the basis of providing a facility that meets the cruise industry’s needs while remaining within the funding provided.

“While disappointed construction of the terminal facility cannot proceed at this time, we respect that funding is no longer available.”

But Infrastructure NSW told the Newcastle Herald the money was still available if the port agreed to build the cruise terminal it first proposed when signing a funding deed in 2016.

The original plan for the terminal included a homeporting infrastructure, but last year, the Port of Newcastle revealed it could not build the terminal for the amount provided by the government due to rising construction costs, extra geotechnical expenses and the engineering of the new terminal’s curved roof.

Port of Newcastle then revised its plans to exclude homeporting facilities, but as a result Infrastructure NSW has declined to fund the project with a reduced scope.

A Port of Newcastle spokesman told the Newcastle Herald that cruise companies had been clear they did not need to use Newcastle as a homeport in the short term.

And the spokesperson said that the port could add temporary homeporting facilities on an “ad hoc basis” if ships wanted to stay longer.

Last year, the outgoing Port of Newcastle chief executive Geoff Crowe asked for more in funding the project, and said a “heated” construction market had led the increased costs, along with the engineering aspects of the “iconic” curved roof that was a centrepiece of the design. He said the extra funding sought would be “less than $4 million”.

But when the Newcastle Herald asked why the private port should not foot the extra cost, Mr Crowe said it was already providing the land and the other port facilities required as part of what he said was a “genuine partnership”.