November 26, 2018 / 6:18 AM / 17 days ago

PNG upholds deal with Huawei to lay internet cable, derides counter-offer

SYDNEY (Reuters) - Papua New Guinea (PNG) will uphold its agreement with China’s Huawei Technologies Co Ltd to build its internet infrastructure, a PNG government minister said on Monday, dismissing offers from Western countries to take on the work.

A security guard stands near the entrance to the newly constructed International Convention Centre, which was funded by the Chinese government, displaying promotional signs for the Asia Pacific Economic Cooperation (APEC) forum in Port Moresby, Papua New Guinea, November 15, 2018. REUTERS/David Gray

The comments from the minister, William Duma, are a blow to Australia, Japan and the United States, which have tried to persuade PNG to dump the Chinese company, amid broad efforts to limit China’s influence across the Pacific.

“We have an existing agreement,” Duma, minister for public enterprise and state investment, told Reuters on the telephone from Port Moresby.

“It’s about honor and integrity, once you enter into a deal and an arrangement you go with it.”

Huawei won a tender to build a network in the South Pacific nation two years ago, but amid deepening concern in the West over the company’s links to China’s government, allies Australia, Japan and the United States recently mounted an 11th-hour counter offer.

But Duma dismissed it.

“It’s a bit patronizing,” he said, adding that Huawei had done about 60 percent of the work on the project.

Huawei said in 2016 it would build a 5,457 km (3,390 mile) network of submarine cables linking 14 coastal towns in the resource-rich nation of 8 million people.

A spokesman for the company declined to comment.

Australia, which has shut Huawei out of contracts to build its own national mobile network on security grounds, blocked the company from laying submarine cable from Sydney to PNG and the Solomon Islands in July.

Western intelligence agencies have said Huawei’s technology could be used for espionage - something the company denies.

Representatives of the Australian, Japanese and United States governments had no immediate comment on Monday.

A spokesman for PNG Prime Minister Peter O’Neill was not immediately available for comment.

Jonathan Pryke, of the Sydney-based Lowy Institute think-tank, said those concerned about China’s influence had been slow to see the inroads Huawei was making.

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“We missed the boat on that one,” Pryke he said. “I think you’ll find there’ll be a lot more attention in future to make sure we don’t miss the boat.”

The rivalry over internet infrastructure comes as Papua New Guinea has found itself at the center of a big-power jostle for influence, with China offering cheap loans and development projects and Australia stepping up its own aid contributions.

Australia, the United States, Japan and New Zealand this month announced a A$1.7 billion power grid upgrade for PNG, which includes some internet infrastructure, which would mean they were not being completely locked out of the telecommunications sector, Pryke said.

Reporting by Tom Westbrook; Editing by Robert Birsel

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