Tourism, business and political leaders have expressed disappointment after Newcastle's long-awaited cruise terminal was pronounced dead in the water.
Port of Newcastle issued a media release on Tuesday announcing that Infrastructure NSW had withdrawn $12.7 million funding for the project.
Infrastructure NSW later told the Newcastle Herald the money was still available if the port agreed to build the cruise terminal it had first proposed when signing a funding deed in 2016.
But, judging by the port operator's public announcement, there appears to be little hope of that happening.
"Infrastructure NSW has advised that the $12.7 million funding for the cruise terminal project is no longer available," it 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."
Hunter Business Chamber boss Bob Hawes described the news as "very disappointing for the region, particularly for those tourism operators who are investing in facilities and services to improve our visitor economy".
"Hosting cruise ships offers a valuable opportunity to promote Newcastle and the region directly to an international market," he said.
"We are currently receiving around 28,000 passenger visits a year from cruise ships, and many of those are overseas visitors.
"It is clear that the existing facilities are inadequate for a growing market and do not help to create a good first impression for our visitors."
The government is spending $55 million on cruise ship facilities in Eden, in the home electorate of Transport Minister Andrew Constance.
Mr Hawes said "similar investment is warranted in Newcastle", which had demonstrated its potential as a cruise destination by attracting an increasing number of ships each year.
"The port is acknowledged as an emerging tourism gateway in the Greater Newcastle Metropolitan Plan, which identifies the role of the Newcastle Cruise Terminal in leveraging tourism opportunities," he said.
"The state government also committed in the 2018 NSW Cruise Development Plan to supporting the growth of cruise tourism in existing regional destinations, including Newcastle.
"The chamber ... is keen to work with the state government and industry stakeholders to get this project back on the agenda."
Original plans for the terminal included home-porting infrastructure, but Port of Newcastle revealed last year that it could not build the terminal for $12.7 million due to rises in construction costs, extra geotechnical expenses and the engineering of its curved roof.
The government made it clear it would not provide more money, and the port subsequently revised its plans to exclude home-porting facilities.
Infrastructure NSW has declined to fund the project with a reduced scope.
A Port of Newcastle spokesman said cruise companies had been clear that they did not need to use Newcastle as a home port in the short term.
The port could add temporary home-porting facilities "on an ad hoc basis" if a ship wanted to stay longer.
The spokesman said the large white tent that now greets passengers had not discouraged cruise operators from visiting Newcastle.
Newcastle hosted 16 cruise ships this summer, its busiest season on record, and expects 17 next season, representing a jump in visitors from 27,000 to 37,000.
Newcastle Tourism Industry Group chairman Kent Warren said it was "unfortunate" the project had stalled.
He said establishing Newcastle as a back-up home port to Sydney should be a priority because it would lead to spin-off benefits for a wide range of businesses.
"What we need in Newcastle is home porting, so we're confident the government is still engaged in that process," he said.
"We're hopeful that all parties can get back to the table and come to an agreement that home porting is the way to go.
"It's frustrating we can't come to agreement when it seems the obvious choice."
Member for Newcastle Tim Crakanthorp said it was a "very sad day for Newcastle" and its tourism industry.
"The government would have known that Newcastle would need more than the paltry $12.7 million offered, when Eden, in the Minister for Transport's electorate, is about to cut the ribbon on a $44 million cruise ship terminal," he said.