The P.E.I. and federal governments signed a new 10-year agreement Friday that will see $163 million in the federal Gas Tax Fund go to P.E.I. municipalities to improve infrastructure.

Federal Fisheries Minister Gail Shea was in Wellington with P.E.I. Infrastructure Minister Robert Vessey to sign the federal gas tax agreement, which will govern the flow of federal funds to the province. 

In total, Canada's Gas Tax Fund will provide $53 billion in funding to communities across the country over the next decade.

It will mean a lot to small communities like North Rustico.

"And with the help of our gas tax, we're going to continue to be a thriving community and we're going to be the place to be on Prince Edward Island," said Anne Kirk, chair of the North Rustico village council.

Now more types of infrastructure projects will be eligible for the fund.

"Municipalities will be able to set their priorities for what they want to use this for, but what this will do is give them stable, predictable funding for 10 years," said Shea.

Bruce MacDougall, president of the P.E.I. Federation of Municipalities, said the money could be spent on water systems, sewer systems or infrastructure, to name a few.

The P.E.I. government will administer the federal money in the fund and will direct a full third of it.

The Gas Tax Fund is part of a  $443-million Building Canada Fund that will go to P.E.I. over the next 10 years, but the negotiations for that full amount are still ongoing.

"We're very, very close to having it signed, but as I've said before this is a 10-year plan and we want to make sure we get the best deal we can,” said Vessey.

P.E.I. wants to use a significant amount of the federal infrastructure money to help fund the third power cable to the mainland.