Papua New Guinea has turned down offers from Western countries and will uphold its agreement with China's Huawei to build its internet infrastructure.
The announcement by the PNG Minister of State Investment, William Duma, is considered a blow to Australia and the US which have tried to persuade PNG to dump the Chinese company as part of efforts to limit China's influence in the Pacific.
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.
The submarine cable network will provide domestic connectivity across 14 main population center’s cities and international connectivity by a link to Jayapura in Indonesia. Photo: Huawei Marine
In 2016, Huawei was contracted to build a 5500 km network of submarine cables linking 14 coastal towns in PNG.
Reuters reports Australia, Japan and the United States recently mounted an 11th-hour counter offer.
Mr Duma says the offer was "patronizing" as Huawei had already done about 60 percent of the work.
"We have an existing agreement," Mr Duma said.
"It's about honor and integrity, once you enter into a deal and an arrangement you go with it."
The rivalry over internet infrastructure comes as Papua New Guinea has found itself at the center of a 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 $US1.2 billion power grid upgrade for PNG, which includes some internet infrastructure.
During the Recent APEC Leaders Summit in Port Moresby, the US said it would join Australia in building a new naval base on PNG's Manus Island.