Labor MP Marion Scrymgour has cast doubt over the future of the planned Middle Arm industrial hub near Darwin, arguing the Commonwealth and the Northern Territory government aren't "anywhere near getting the sign-off".

Speaking at a candidates' forum in Alice Springs on Saturday, the Lingiari MP, who is battling to hold her seat from CLP candidate Lisa Seibert, said the federal government's equity share loan in the planned industrial precinct, worth $1.5 billion, was becoming a difficult hurdle to overcome.

"One of the biggest hurdles in Middle Arm…is the whole project is equity-based," Ms Scrymgour said in a video uploaded by ABC News.

"The Northern Territory Government is signalling to the Federal Government that they don't want to put their equity to it, they just want the Federal Government to continue to fund this on their own."

The Labor MP added: "The federal government has said 'no, if you want this to happen, it has to be with the agreements that were signed with the former government'."

Last year, a Senate report into the proposed industrial hub did not offer recommendations from the major parties. However, Independent Senator Lidia Thorpe reiterated her calls for the project to be scrapped, echoing calls by the Greens and crossbench that the project is a risk to the health of people and ecosystems in the NT.

"The Larrakia People were unanimous in asserting that no Free, Prior and Informed Consent has been obtained for the project and that their concerns have been ignored by both the NT and federal Labor governments," Senator Thorpe said at the time.

There has been controversy surrounding Middle Arm because it has been labelled a sustainable development despite being linked to new gas projects. Former NT Chief Minister Eva Lawler previously declined to rule out if her government would support a petrochemicals industry.

She told the inquiry: "Middle Arm provides the opportunity for energy for industry…whether it's renewables or its gas (LNG)".

Modelling by consulting firm EY suggests the Middle Arm project would bring in $200-$700 million in annual taxes for the NT, as well as between $700 million and $2.4 billion for the federal government.

On Saturday, Ms Scrymgour said, "I don't think, in all honesty, we're anywhere near getting the sign-off in terms of Middle Arm as a renewable hub".

"I think that we're a long way from landing on how we go forward with Middle Arm."

The massive hub was first trumpeted as a 'sustainable development precinct' however final approval and distribution of federal funding hinged on the NT government's business case, which was rejected by Infrastructure Australia last November amid environmental impact concerns.

Along with Ms Thorpe, the crossbench, and the Greens, environmental groups and health experts have opposed the hub due to concerns it could hasten pollution levels and expand the fossil fuel industry.

Paediatrician Dr Louise Woodward told the Senate inquiry last year she had "major concerns" about the health outcomes from the project.

"The health impacts are serious to the surrounding populations, and my opinion is backed up with scientific evidence," Dr Woodward said, arguing she needed to speak out as she hadn't heard enough on the health impacts from the government.

Shadow Minister for Indigenous Australians Senator Jacinta Nampijinpa Price said the inquiry gave a voice to "those who are hellbent on destroying the Northern Territory's economy and opportunities for our most marginalised, Indigenous Australians".

"The rest of the country somehow seem to think that we should be kept as museum pieces here in northern Australia, that we should not be allowed to progress and move forward with the rest of the world to create economic opportunities [and] economic independence," the NT Senator said last year.

In February 2024 Infrastructure Australia refused to consider the final stage of the NT's business case, arguing it required further work.

NT Logistics and Infrastructure Minister Bill Yan told the ABC said the CLP government would prefer funding for Middle Arm be delivered as a grant.

"Any user fees would all then come to the territory, rather than paying a significant proportion to the Australian government," he said.