Promising jobs for northerners and financing for a multimillion-dollar hydro project in the Yukon, Prime Minister Stephen Harper offered no guarantee federal money would go to a Canadian firm to complete the work.

Before a throng of Conservative supporters gathered at the Gold Rush Inn in Whitehorse on Friday afternoon, Harper re-announced up to $71 million in funding for the Mayo B hydro expansion.

(Earlier this year, Harper dispatched parliamentary secretary Brian Jean to the territory to make the same commitment.)

When asked if there were any conditions on the financing - primarily that it be spent on contracting a Canadian company for the job - Harper said the government will not prevent a foreign firm from winning the contract.

"Let me be absolutely clear on that. The answer to that is no," Harper told a news conference.

"The federal government does not have a domestic procurement policy. We respect our trade obligations. As you know, we have been critical of the 'buy American' proposals in the United States. We do not think those kinds of proposals are good for the world economy."

According to David Morrison, theYukon Energy Corp. president, Kiewit Construction, based in Omaha, Nebraska, has been picked to work with Winnipeg engineering firm KGS to come up with a design.

Kiewit gets up to $300,000 in consultancy fees while the energy corporation board has, to date, approved $2 million for KGS' work.

If Kiewit can build the design on or under budget, it would get the contract and cut its consultancy fee in half. If not, the energy corporation would keep the KGS design and put the contract out to tender.

The reason the potential builder - Kiewit - is working with the designer is to fast-track the project, as federal funding is contingent on the Mayo B expansion being completed by spring 2012.

"We picked Kiewit, in large part on their vast experience in western Canada building hydro projects, primarily small to mid-sized similar to Mayo," said Morrison.

"We're now in the process with them; they're looking at the work and technical specifications ... they're looking at that and we'll be working towards a price with them during the fall."

Morrison said the budget for the Mayo B expansion is between $100 million and $120 million, while the cost of linking the territory's northern and southern grids is approximately $40 million.

And Premier Dennis Fentie, whose handling of a potential merger of energy corporation assets with Calgary-based ATCO's Yukon Electrical Co. Ltd. has been called into question, said he is confident Kiewit is the right company for the job.

"The Yukon Energy Corporation went into a process that included five companies in total. Kiewit came out at the forefront in terms of meeting all the criteria," Fentie said following Harper's announcement.

As for the selection of an American-based firm, Fentie, who has previously told the Star he is against protectionism spending policies, said the energy corporation is in charge of contracting, not the government.

"We also have to understand that the energy corporation is its own contract authority, and we will ensure that built into the contractual arrangements are the initiatives to meet local benefit, local employment and I want to repeat again, the project itself, has provision for first nation benefit," said Fentie.

Federal dollars for the Mayo B expansion, that will increase electricity generation at the site by an additional five to six megawatts, come from the federal government's $1 billion Green Infrastructure Fund.

On Friday, Harper touted that the Mayo B expansion would cut forecast diesel use for electricity in 2012 by 40 per cent and reduce greenhouse gas emissions from energy production in the territory by 50 per cent from current levels.

The Mayo site's current hydro electricity generation capacity is five megawatts with three one-megawatt diesel generators for backup.