The federal government is blaming the high cost of building in the North for making the Nanisivik Naval Facility too expensive to build as planned.

In a recent letter to the Nunavut Impact Review Board, the federal government said the facility won't be as big as what was first announced in 2007.

In a written statement, a Defence department spokesperson said the plans were revised in order to keep the project within its $100 million budget, and puts the blame on the high cost of building in the north.

The federal government says the project is still on schedule with work set to begin as early as next year.

The Nanisivik Naval Facility's main function will be as a refuelling station for the Navy's Arctic patrol vessels and other government vessels.

It's expected to be operating by 2016.