The New Brunswick government has provided Irving Paper Ltd. with a $9-million loan to make its Saint John mill more energy efficient.

"Our government recognizes how integral it is for companies to improve their operations and we want to support them as they invest in upgrades and efficiencies to increase their competitive edge in the world market," said Business New Brunswick Minister Greg Byrne on Wednesday.

The loan has an annual interest rate of 4.7 per cent and must be repaid over 10 years.

The money will cover half the cost of purchasing a new boiler that will help reduce the consumption of heavy fuel by about 71,000 barrels per year, said Mark Mosher, vice-president of pulp and paper operations for J.D. Irving Ltd.

The current boiler, which uses the heat from steam to dry the tree pulp that makes paper, is about 40 years old, Mosher said.

The new boiler will be installed by September and is expected to reduce carbon dioxide emissions by 16 per cent and sulphur dioxide emissions by 26 per cent, Mosher said.

It will also put the mill in a better financial position, he said, with projections suggesting it will save the company at least $4.5 million annually.

The loan won't change Irving's push for the government to subsidize electricity rates, Mosher told reporters.

"This doesn't impact the electricity side," he said. "The $20-million gap that we've always talked about between us and our North American competitors, this has no impact on that."

J.D. Irving Ltd., Flakeboard Company Ltd. and Fraser Papers Inc. asked the provincial government for a break on power rates in January. The forest companies argue power rates in New Brunswick are nearly 30 per cent higher than the North American average.

In March, Mosher told CBC News that the company was examining factors affecting its competitiveness. Its access to competitive wood supply and competitive energy would determine if the company will continue to invest in New Brunswick, he said.

Irving has examined moving its Saint John mill to Quebec, Mosher added.

Byrne said the government is listening to the company's concerns and wanted to show that by lending the money for the boiler.

"It's important that we come to the table and be proactive," said the minister. "These are important jobs to this community — 350 jobs. We can't afford to put that at risk."