Gov't Will Not Bail Out Companies Affected by Sidoarjo Mudflow
Jakarta. East Java Governor Soekarwo said the government will not bail out private companies affected by the Sidoarjo mudflow, following a meeting with President Joko "Jokowi" Widodo at the Presidential Palace in Central Jakarta on Wednesday afternoon (26/04).
The Sidoarjo mudflow, also known as the Lapindo mud, occurred when a mud volcano erupted following a blowout of a natural gas well Lapindo Brantas was drilling in Porong subdistrict in Sidoarjo, East Java, in May 2006.
Hundreds of residents had to be relocated after their houses were buried in the mud, with many seeking compensation from the government and Lapindo Brantas.
At least 30 companies are also demanding compensation from the East Java provincial administration.
"The president wanted clarification of the 30 companies that demand compensation of Rp 701 billion [$52.5 million]. According to the meeting, the president said it has to be settled business-to-business, not by the government," Soekarwo said.
However, the government will complete the compensation of local residents whose land was buried in the mud.
The Ministry of Public Works has so far allocated around Rp 54 billion from the 2017 state budget towards compensation.
The Sidoarjo mudflow was recorded as the world's biggest eruption of a mud volcano. Lapindo Brantas officials and some scientists claim the eruption was the result of an earthquake.
However, a 2008 report by a group of international scientists denied this premise, stating that it was not the result of a natural disaster, but caused by drilling activities.
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