Papua New Guinea set to end Australia refugee contract PORT

Papua New Guinea will not renew a contract with an Australian company providing security at Pacific refugee camps, a senior minister has told AFP, in another setback for the deeply controversial policy.

Singapore-registered Paladin Holdings provides security and other services at three "transition centres" for refugees being held on Papua New Guinea's remote Manus Island after trying to get to Australia.

Canberra has turned back thousands of refugees arriving by sea, instead putting them in offshore camps where mental illness and suicide attempts are rife.

The policy has cost Australia billions of dollars and earned it international opprobrium, but remains a vote winner at home.

Yet the new government in Port Moresby, Papua New Guinea's capital, plans to "terminate (the) Paladin contract by end of this month" said Immigration Minister Petrus Thomas.

Thomas said his government had notified Australia's home affairs department that it will launch a "transparent tender process" that focuses on local firms' participation.

Earlier this year it emerged that little-known Paladin was given the contracts -- worth more than Australian dollar 420 million (USD 289 million).

The firm had little experience, was thinly capitalised and had ties to a senior Papua New Guinea politician.

Australia's Auditor-General Grant Hehir in April opened an investigation into whether the tender process was for the contract was appropriately managed.

Local companies "now have the capacity and expertise to do the job and should be given the opportunity to participate", Thomas said.

Well-connected Manus businessman Sam Tasion has already indicated his interest, saying in a recent statement that "we cannot pass the buck in telling Australia to remove Refugees in Papua New Guinea".

Despite the seemingly imminent end of Paladin's contract, Australia's Home Affairs Minister Peter Dutton -- who has tethered his political persona to the offshore detention policy -- said Sunday he expected Paladin's contract to be renewed.

"The likelihood is there's a continuation. I'm not going to comment when the department is in the process of the arrangements," he told the Australian Broadcasting Corporation.

Several hundred refugees from Manus and Nauru have been resettled in the US, but the process has been slow, leaving some refugees languishing for years on the islands.

Dutton added that more than 300 refugees have been rejected for transfer by the US so far.