The latest development further advances the Muskrat Falls hydropower plant, projected to entail a total investment of $7.4bn.
Natural Resources Canada will manage the 35-40 years federal loan guarantee, while the Newfoundland and Labrador government will act as the advisor for the project, reported hydroworld.com.
Harper was quoted by the website as saying that this project is potentially a significant game-changer for the region.
"What the federal government is doing under this agreement is providing a loan guarantee at extremely low risk, and frankly, I think in the long term, zero cost to the taxpayers of Canada," Harper said.
Newfoundland and Labrador are looking at alternative avenues to raise the remaining $1.1bn requirement for the project.
According the government reports, Muskrat Falls is viable for development and would stabilize energy rates in the country.
