Papua New Guinea prime minister quits after weeks of turmoil

Papua New Guinea's Prime Minister Peter O'Neill had resisted calls to resign for weeks but stepped down on Sunday (May 26). PHOTO: AFP

SYDNEY (REUTERS) - Papua New Guinea Prime Minister Peter O'Neill announced his resignation on Sunday (May 26) after seven years in the top job following weeks of high-level defections from the ruling party.

Mr O'Neill told media in Port Moresby that he had handed over leadership of the Pacific nation to Sir Julius Chan.

Mr O'Neill had resisted calls to resign for weeks but stepped down on Sunday, saying that recent movements in Parliament showed a "need for change", ABC News reported.

Opponents of Mr O'Neill said last Friday that they had mustered enough support in parliament to oust him over a range of grievances including a gas deal with France's Total, which critics have questioned.

Political instability is something of a fixture in the resource-rich but poverty-stricken South Pacific nation and Mr O'Neill, who has been leader since 2011, has seen off previous attempts to topple him.

Defections from the ruling coalition have been going on for weeks, and last Friday at least nine members switched sides, according to two ministers who were among them.

Mr O'Neill's opponents needed to rally 62 members of Papua New Guinea's 111-seat parliament to vote him out.

Opposition politicians said last Friday that they would push for investigations in Australia and Switzerland into a A$1.2 billion (S$1.1 billion) loan arranged by finance group UBS if there was a change of government, the Australian Financial Review reported.

A report by the Ombudsman Commission of Papua New Guinea into the 2014 deal that allowed the South Pacific nation to borrow from UBS to buy a 10 per cent stake in Australian Stock Exchange-listed energy firm Oil Search is scheduled to be tabled in Papua New Guinea's parliament next week.

Oil Search in turn used the money to buy into the Elk Antelope gas field being developed by France's Total.

Papua New Guinea is estimated to have lost 1 billion kina (S$407 million) on the deal after being forced to sell the shares when the price fell in 2017.

Australian Prime Minister Scott Morrison thanked Mr O'Neill for his friendship.

"I will look forward to working with the new prime minister of PNG in the same way I have enjoyed such a strong friendship and relationship with Peter O'Neill," Mr Morrison told reporters in Canberra.

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