Hodges Ette, the Royal Papua New Guinea Constabulary's assistant police commissioner, said in a statement that O'Neill had been brought in for questioning on Saturday after arriving at Jacksons International Airport after his return from Brisbane.

Police allege that when O'Neill, 55, was prime minister, he had directed payments for the purchase of the two generators from Israel "without due consideration for procurement processes ... without the approval by the parliament" and without any tender process.

The generators cost 50 million kina ($A21.7 million).

Ette said there is "reasonable evidence for misappropriation, abuse of office, and official corruption".

Police had not let O'Neill go several hours into the interview. It was not clear whether he would have to spend the night in custody.

Ette said O'Neill will be allowed bail but he will have to quarantine himself at his residence for the next 14 days after the interview.

O'Neill had resigned in May last year after seven years as the prime minister of the Pacific Island country of some eight million people, which was under Australian administration until 1975.

The O'Neill government was embroiled in many controversies, including the handling of a plan involving French energy giant Total to double the country's liquefied natural gas exports.

There were also allegations of deteriorating basic services, the handling of the return of polio, and cases of corruption, especially in the aftermath of 2018 Asia-Pacific Economic Cooperation summit in Port Moresby.

Australian Associated Press