The New Brunswick government will continue its relationship with Canadian Blood Services, an announcement that ends any plans to create a stand-alone blood processing facility in the province.

Health Minister Madeleine Dubé made the announcement in Fredericton on Friday. She said it would be too costly to set up a New Brunswick-based system.

“Our province is in a precarious financial situation,” Dubé said in a statement.

“The operational costs and potential liabilities associated with establishing our own blood agency are far too risky for us to take on. Continuing our relationship with CBS ensures that New Brunswick remains connected to a national system which provides safe, high-quality blood products that New Brunswickers can depend on.”

Canadian Blood Services announced plans in 2009 to close the blood processing and delivery clinic in Saint John and consolidate operations in Dartmouth by 2012.

The Canadian Blood Services responded to the New Brunswick government's announcement from its Twitter account on Friday afternoon.

"CBS believes [the] NB [government] has made right decision & will work every day to maintain the trust that has been placed in us," the CBS said on its New Brunswick Twitter account.

The Progressive Conservative government and the previous Liberal government have all fought to keep the Saint John-based facility.

Liberal MLA Bill Fraser said the decision to allow Canadian Blood Services move to Nova Scotia amounts to a broken election promise. (CBC)“Our government has carefully reviewed the reports and data that were submitted to us along with the comments we received from New Brunswickers and stakeholders,” Dubé said in a statement.

“While our preference was always that CBS blood production remain in New Brunswick, I am comfortable that we’ve done all in our power to keep CBS here and that this decision to continue and strengthen our relationship with CBS ensures that we have an affordable, safe and available blood supply.”

The Progressive Conservatives promised in the 2010 election campaign that it would "ensure blood services continue to be offered and located in New Brunswick."

The agency did announce plans for a stock holding unit for blood in Saint John, enough to meet day-to-day hospital needs. The agency also plans to keep donor collection sites in Saint John and Moncton.

Dubé told a news conference on Friday that CBS was committed to providing blood services in New Brunswick and made "adjustments to its consolidation plans."

Liberal MLA Bill Fraser, the opposition's health critic, said the CBS decision is another broken promise.

"They made a very clear commitment and a very clear promise, their promise has been broken, their promise was to maintain this facility in full force in the city of Saint John and the province of New Brunswick," Fraser said on Friday.

"We find out here today that this is not going to happen. So it is another broken promise of David Alward and the Saint John MLAs."

PC MLA Jim Parrott said many of his concerns with CBS's move to Nova Scotia have been addressed. (CBC)

Fundy-River Valley Tory MLA Jim Parrott, a former heart surgeon, has been a vocal opponent to the blood centre leaving Saint John.

He said on Friday that some of his concerns were addressed on Friday.

"I think that they take care of some of the concerns," he said.

The provincial government will strike a watchdog group that will oversee the operations of Canadian Blood Services. The group is intended to bring any of New Brunswick's concerns directly to officials at the agency.

Parrott said the new group must keep a close eye on the national agency to ensure that it maintain its services.

"I for one am comfortable now with the situation we have. But the key thing as the minister said, that Canadian Blood Services we have to watch them carefully and we have to make absolutely sure that they do what they say," Parrott said.

Progressive Conservative cabinet minister Margaret-Ann Blaney, a Saint John-area MLA, said the decision to see the blood production centre leave Saint John is not "joyful."

"We don't want our blood production facility to move, bottom line," Blaney said.

The Tory cabinet minister took a direct swipe at Michael Murphy, the former Liberal health minister and candidate for the party's leadership.

Blaney said she found it "quite shocking" to hear that Murphy favoured setting up a stand-alone agency in New Brunswick.

She said the problems with CBS started when he was health minister.

Contentious issue

The future of the Canadian Blood Services facility in Saint John has been a contentious issue for several years.

A previous government-commissioned report, released last July, suggested that New Brunswick's best option is to remain with Canadian Blood Services after it consolidates services in Dartmouth.

Although the report by KPMG stopped short of endorsing any of the three options under review – staying with the national agency, creating a new agency, or partnering with another agency such as Héma-Québec — it ranked sticking with Canadian Blood Services the highest.

The report said setting up a stand-alone agency at the Saint John facility would cost about $23 million.

However, that report did not end the debate.

The provincial government conducted another report, which suggested the province would be better off setting up its own independent blood centre.

The report by Growth Strategies, a copy of which was obtained by CBC News in November, said it would be cheaper than staying with the national agency.

It suggests an independent service would save the province more than $10 million in the first three years, resulting in payback of approximately 38 months.