Indonesian firm agrees compensation for mud disaster
04 Dec 2006 11:14:30 GMT Source: Reuters
SURABAYA, Indonesia, Dec 4 (Reuters) - An Indonesian energy firm blamed for a torrent of hot mud gushing from the ground for months signed an agreement on Monday to pay victims more compensation for their swamped land, an official said. Some 10,000 people were displaced and entire villages inundated by the 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. Lapindo Brantas, the operator of the well, has agreed to pay 2.5 million rupiah ($273.2) per square metre for swamped land and damaged buildings, and 120,000 rupiah per square metre for inundated rice fields, Yusuf Marta, vice president of PT Energi Mega Persada <ENRG.JK>, told reporters. "Lapindo has agreed to fulfil peoples' demands through a buying and selling process. The process will take about two years ... We have agreed on the prices as people asked," Marta told reporters. "We will also build a new Sidoarjo area where people can live with their families and neighbours just like before the disaster took place." Lapindo is a unit of Energi, partly owned by the Bakrie Group, which is controlled by the family of Indonesia's chief social welfare minister Aburizal Bakrie. Some victims had asked for compensation of 3.5 million rupiah per square metre for their damaged property and swamped land. Until now, Lapindo, which has denied the mud flow is directly linked to the drilling operation, had offered a monthly stipend of 300,000 rupiah to villagers who have lost their houses and rent for new accommodation. Anger has been mounting in the area over the hot mud, which has continued to gush despite several government contingency plans to plug the leak, which 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. Separately, Indonesia's environment minister, Rachmat Witoelar, said the government was trying to channel the mud to a river nearby as the mud flow was beyond the control of any pumps and dykes. "We have not gotten to the stage that we can stop the flow," Witoelar told foreign correspondents in Jakarta. "The mud keeps spewing out ... at close to 200,000 cubic metres a day. It is beyond any pumps or any dykes to be contained. So we have designed an alternative to contain the damage (by) creating a wetland area at the estuary of the Porong river." He said some 400 hectares of land had gone to waste already and steps had to be taken to ensure that the mud flow did not extend to outlying villages. ($1 = 9,150 rupiah) (Additional reporting by Sugita Katyal in Jakarta)
