The Papua New Guinea Government has terminated a major scheme to house public servants because it says costs have escalated beyond reason.
Under the Public Service Home Ownership Program 200 houses were to be built at 8 Mile in the capital, Port Moresby, at a cost of just over 12 million US dollars.
But the Government has announced that because of increased costs the contractor, Australasia Pacific Panel Ltd, is not going to be able to deliver at the set price.
The prime minister Peter O'Neill says the contractor has offered to repay the money it has already received.
He says the Government is strongly committed to developing an alternate scheme as soon as possible.