PNG chief secretary Isaac Lupari is a director of a company building a new gas-fired power plant in Port Moresby while being responsible for the country's state-owned electricity company and serving as the gatekeeper to PNG's cabinet.
A statement presented to the board of PNG Power last month by then managing director Carolyn Blacklock accused Lupari of exerting "extraordinary pressure" on her to sign a power purchase agreement with the Dirio Gas and Power Company, of which he is one of five directors.
At the same time, Blacklock accused Lupari of "obstructing" the construction of a 22km transmission line to another power station that has a signed power purchase agreement with PNG Power.
The allegations come as PNG seeks a loan from the Australian government for up to $1.5 billion to help it avoid a looming fiscal cliff.
The biggest increase in PNG's budget is public service costs, which soared by 19% last year under Lupari's leadership.
Blacklock resigned on August 29 after a year-long battle with Lupari over the 45MW Dirio power station.
She said PNG Power was "unable to on-sell" electricity from the plant because Port Moresby's energy demand "does not support a second power station".
The rival 58MW NiuPower station, part-owned by OilSearch, is completed but unable to be used because PNG's cabinet has blocked the construction of a vital interconnector.
In her statement, obtained by The Australian, Blacklock said the decision to prevent the transmission line going ahead was made on the advice of the Central Agencies Co-ordinating Committee, which Lupari chairs in his role as chief secretary.
She said Lupari's multiple roles were "in direct contradiction to good governance and should not be tolerated or repeated".
"It has been a very difficult 12 months to know the irrefutable facts on the negative impact of agreeing to Dirio and yet being constantly obstructed from these facts being known," Blacklock told the board in the statement presented on August 6.
"I can only assume this is due to the conflict of interest (the) chief secretary has as head of the public service and head of a developer of a power station."
The Australian contacted Lupari's office for comment but it failed to respond.
In a statement released when Blacklock resigned, Lupari said: "I always declare my conflict of interest when matters relating to Dirio Power project are presented to CACC and excuse myself from such deliberations and meetings."
He accused Blacklock of being "involved in corporate and local politics", and "undermining established processes and people in government at all levels", saying Dirio was "100% nationally owned" by landowner groups.