The mayor of a town in central Newfoundland is hoping provincial government officials will respond favourably, and with financial support, to a bid to merge with a neighbouring town.

Mayor Jody Fancey said previous discussions about amalgamating Bishop's Falls with the much larger town of Grand Falls-Windsor never went anywhere because of  a heavy debt load in Bishop's Falls.

Fancey said a merger of the towns, which are about 15 kilometres apart, could succeed if the Newfoundland and Labrador government steps in.

"There's a number of people who feel that we would benefit as a region by coming together," Fancey said.

"There would be a lot more details to work out, but we're never going to get there as long as Bishop's Falls has the high debt load and the infrastructure issues that we have right now."

Fancey said the town is dealing with a new setback. She said council just found out it will not receive its annual grant of $100,000 from AbitibiBowater, which shut down production last week at its Grand Falls-Windsor newsprint mill.

The company employed hundreds of mill workers, foresters and stevedores in the region.

Fancey said she is also asking the province to increase commercially zoned land in Bishop's Falls to lure new businesses.

Bishop's Falls is not the only town in Newfoundland and Labrador to revive talk of amalgamation. Wabush and neighbouring Labrador City have agreed to present a proposal to residents and the provincial government in the coming months.