Prime Minister Tony Abbott’s $16 million election sweetener to upgrade Cadbury’s Tasmanian factory has been dumped because the company could not meet the grant criteria.

The funding injection was promised by Mr Abbott during his 2013 election campaign, and was meant to be spent on a new visitor centre so Cadbury could resume factory tours.

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On Thursday, factory operator Mondelez Australia announced the withdrawal of the application because they were unable to meet the required 20 per cent increase in production.

Mondelez Australia managing director Amanda Banfield said a lack of overseas demand was to blame.

“It reached a point where it was clear that we could not satisfy the grant criteria and it’s for that reason that we’ve decided to withdraw our application,” Ms Banfield said.

“Specifically what we couldn’t satisfy was the requirement that we were able to sign up to significantly increasing volumes through our plant here in Claremont.

“That was dependent on us accessing some substantial new export volume orders.

“We don’t have those orders today and therefore it wasn’t possible for us to sign up to the grant criteria.”

The investment was expected to create 200 jobs, but Ms Banfield said the company would now spend $20 million of its own money to upgrade the plant and protect jobs.

Senator Eric Abetz said the $15 million would be spent elsewhere in the state, but did not indicate where or when.

Tasmanian Premier Will Hodgman said he was disappointed by the announcement but was happy the government would continue its investment in the state.