HALIFAX, Nova Scotia (AP) – The Nova Scotia government confirmed Thursday it will invest $4.4 million to provide an economic lifeline to the struggling ferry service that links Yarmouth with two ports in Maine.

The Economic Development Department will get the money from the province’s Industrial Expansion Fund to help Bay Ferries Ltd. offset a sharp increase in the cost of fuel.

“To be quite frank, if the money was not forthcoming, the service would stop,” said Jamie Muir, acting minister of economic development.

“Fuel costs have nearly tripled in … the last couple of years and ridership is down by almost 50,000. A cash infusion was necessary.”

Bay Ferries operates the Cat, a high-speed ferry that runs between Yarmouth in southwestern Nova Scotia and two communities in Maine – Bar Harbor and Portland.

About 100 people are employed by the Bay Ferries service in Yarmouth.

Premier Rodney MacDonald would not get into the specifics of conversations government officials had with the company, but he said he was persuaded the company needed help immediately.

“I believe without the province of Nova Scotia stepping in, that service would have been discontinued,” MacDonald said as he emerged from cabinet.

“It’s a significant contribution that we’re making and the company has also indicated that without that assistance they would be hard pressed to be able to continue that service this year.”

The money will put additional pressure on the province to step in and help another troubled ferry run between Digby, Nova Scotia, and Saint John, New Brunswick.

MacDonald said sorting out that issue will require the participation of not only Nova Scotia but New Brunswick and the federal government as well.

All three governments agree to fund the Digby run on a one-time basis a few years ago.

However, that deal and the money that came with it expires on Jan. 1, 2009.

Politicians and businesses in the area say losing the Digby service would have a devastating effect on the local economy.