The Philippine government is offering to hand control of a swathe of territory in the Muslim south to the Moro Islamic Liberation Front (MILF), effectively voiding a 12-year-old peace deal that put the area under the control of a rival rebel faction. The sweeping deal would, for the first time, grant a rebel administration the power to collect lucrative mining and oil taxes. The bulk of the funds would remain in the hands of the rebel administrators to spend in the region, while the rest - between 20 and 30 per cent - would go to the national government in Manila. The plan, which was outlined by MILF spokesman Eid Kabalu, would effectively scrap the Autonomous Region of Muslim Mindanao (ARMM), consisting of five Mindanao provinces originally awarded to the rival Moro National Liberation Front (MNLF). The new political entity with expanded powers would be called the Bangsamoro Juridical Entity (BJE), he said. Details of the proposed peace settlement with MILF have been kept under wraps for years. Mr Kabalu's description of the deal, which has yet to be sealed, mirrors a leaked report about the negotiations that emerged on Sunday. The report described a briefing given by presidential peace adviser Jesus Dureza to military and police chaplains last week. The Catholic Bishops Conference of the Philippines reported that Mr Dureza said the government was prepared to hand over to the MILF control of four of the ARMM provinces, as well as 75 per cent of oil and mining revenue. He added that the government wanted to seal a new peace deal with the MILF rebels before ARMM elections this August. Mr Kabalu said the overriding motivation behind the new peace deal was to create an economically viable Muslim homeland that did not depend on the national government. He said the ARMM was a failure, largely due to a lack of money. The group's spokesman added that the inclusion of all five ARMM provinces in the BJE had been basically agreed upon last year. What still needed thrashing out, he said, was which Muslim villages outside the ARMM would be added to the BJE. The government and MILF had agreed 'in principle' to hold a referendum to ask the villages if they wanted to join, he said. The rebels were trying to convince the government that such a vote should take place only after a transition period of several years. Also in the balance, he said, was the rebel demand that the August ARMM elections 'be suspended to give way to what we call a gradual takeover of a new institution [the BJE]'. Mr Dureza has confirmed that he briefed chaplains on the peace talks last week. But he said some of the statements attributed to him were inaccurate. 'That was not supposed to be for publication because the briefing was closed doors and these are still being negotiated and are unresolved,' he added. One area of contention is Sulu province, the home territory of the MNLF, which signed the 1996 peace deal with the government. MNLF spokesman Ustadz Sharif Zain Jali said the group would oppose the deal, claiming that 'any negotiation without the participation of the MNLF is illegal'. When the 1996 peace deal was forged, the MNLF was the most powerful rebel group. But since then it has been weakened by the absorption of many members into the government's armed forces and the jailing of its leader, Nur Misuari. The MILF, on the other hand, has grown into a 10,000-strong armed force. It has emerged as the preferred negotiating partner of the government and western powers, while the Organisation of the Islamic Conference, a 57-nation organisation, still recognises the MNLF.