05/09/2012 06:53 EDT | Updated 07/09/2012 05:12 EDT

Newfoundland and Labrador government issues warning about ferry construction

ST. JOHN'S, N.L. - The Newfoundland government has given a local shipbuilder until the end of the week to settle a year-long dispute over cost-overruns for two provincial ferries.

The government says that unless a settlement is reached, Kiewit Offshore Services in Marystown will lose a contract for a third vessel.

The province has given the shipyard a new offer, but no details were released.

Premier Kathy Dunderdale says she's hopeful an agreement can be reached.

Dunderdale says she wants the ferries to built in Marystown, given the poor economic situation on the Burin Peninsula.