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JAKARTA - The Indonesian energy firm blamed for a mud disaster that left about 10,000 homeless will have to pay 323 million euro to victims and for efforts to stop the toxic flow, the country's president said on Thursday. Entire villages have been inundated by the torrent of mud that has flowed since a drilling accident in May, causing an unfolding environmental disaster in the Sidoarjo area near Indonesia's second largest city, Surabaya.
President Susilo Bambang Yudhoyono said Lapindo Brantas, the operator of the well, would have to pay 2.5 trillion rupiah (212 million) in compensation for people whose houses have been submerged by the mud. A fifth of that money should start to be disbursed in March. About 1.3 trillion rupiah was also needed for efforts to stop the mud and would have to be paid by the company between January and March, he said. "This is the first comfirmation. Hopefully, this can complete the job," he told reporters.
Yudhoyono said the disaster had damaged roads, railway, gas and electricity networks but did not say who would be responsible to fix them. "Realising the disruption of the regional economy and infrastructure in East Java, we will help by among other things, implementing special schemes in the fiscal and banking sectors," he said, adding that details would have to be discussed by related ministries and bankers.
Lapindo has previously agreed to pay 2.5 million rupiah per square metre for swamped land and damaged buildings, and 120,000 rupiah per square metre for inundated rice fields, less than what some of the victims had been asking. Lapindo is indirectly controlled by PT Energi Mega Persada Tbk, partly owned by the Bakrie Group, which is controlled by the family of Indonesia's chief social welfare minister Aburizal Bakrie.
Anger has been mounting in the area over the hot mud, which has continued to pour out despite several government contingency plans to plug the leak. The leak has also been blamed for a gas pipeline explosion in the area that killed 13 people. Several experts have said the mudflow could have been triggered by a crack about 6,000 feet (1,800 metres) deep inside the well.
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