PAPUA New Guinea's Prime Minister Peter O'Neill has been accused of "stealing" an $876 million asset, the Ok Tedi copper-gold mine, by former prime minister and former central bank governor Mekere Morauta.
Sir Mekere said that Mr O'Neill had decided to expropriate the mine without paying compensation to the people of Western province, who are the chief owners and beneficiaries of the trust fund PNG Sustainable Development Program (PNGSDP), which owns 63 per cent of Ok Tedi.
Mr O'Neill has consistently complained, however, that through its veto power over changes to PNGSDP's constitution, BHP Billiton retains a degree of ultimate control that is inappropriate.
The Ok Tedi ownership structure was established through an arrangement between BHP and the PNG government -- then led by Sir Mekere -- just over a decade ago when the former quit running the mine in the wake of environmental disasters there.
Mr O'Neill said yesterday: "It is time to put the ownership of the mine, and its future, beyond doubt. The behind-the-scenes influence of BHP, and its representatives and appointees, has gone on for too long."
It is understood that legislation is being drafted accordingly, which may be presented to parliament during the current sitting.
Australians have invested almost $19 billion in PNG, overwhelmingly in the resources sector, and the outcome of the long-running row over control of Ok Tedi is being watched closely by the industry, which earns about 80 per cent of the country's export revenues.
Mining Minister Byron Chan has told parliament "the government is looking at taking over" the $5.6bn Frieda River copper-gold project, 81.82 per cent owned by GlencoreXstrata.
And earlier this month Commerce Minister Richard Maru blocked the partial takeover of New Britain Palm Oil by a Malaysian company, saying that 90 per cent of the economy was controlled by foreigners.
The battle for control of Ok Tedi, and of PNGSDP with its massive funds, has escalated since almost a year ago when Mr O'Neill told parliament that leading Australian economist Ross Garnaut -- who was chairman of both, and had chaired PNGSDP since its establishment -- was "no longer welcome" in the country.
In 2011, the mine provided $543m or about 16 per cent of the government's total income.
Mr O'Neill said that PNGSDP, whose corporate structure is domiciled in Singapore, "has collected money and parked it in the bank, and hasn't been investing it in helping everyday issues".
But PNGSDP's chief executive David Sode said that the trust in its first decade spent about $450m on 662 projects, focused on education and health. And two-thirds of the income, from mine royalties, has accumulated $1.5bn in a long-term fund to be used for the Western province when the mine closes.
The association of communities affected by the mine has written to Mr O'Neill saying they have agreed to the mine's continuing operation in order to gain development benefits via PNGSDP, but "we have not consented to the takeover of PNGSDP shares in Ok Tedi by the government".
Sir Mekere said that "the risk of turning Ok Tedi Mining into a state-owned enterprise far outweigh the benefits". He said "it would destroy the mine and threaten the flow of dividends", with "reliable sources estimating that at least billions of kina have gone missing from government coffers in the last few years".
The multi-billion-dollar scheme to bring hydro power from PNG's Purari River to Queensland, via a joint venture between Origin Energy and PNGSDP, would appear to be one of the casualties rippling out from this massive row.