Sidoarjo – Minarak Lapindo Jaya (MLJ), the Bakrie company handling the Lapindo mudflow, says that it has yet to pay Rp 1.023 trillion (US$127 million) in compensation for victims of the disaster.

Company vice president Andi Darussalam Tabussalla said that MLJ had run short of cash after paying 75 percent of the total amount of compensation to residents affected by the disaster.

"We will be able to pay the compensation if the government give us a loan," Andi said, as quoted by kompas.com. Andi said that the company had applied for a loan from Bank Jatim only to be turned down by its management. The MLJ application for the loan was made last November.

In the past week, victims of the Lapindo mudflow stepped up their protests and threatened to occupy the office of the Sidoarjo Mud Disaster Mitigation Agency (BPLS).

The protesters wanted Lapindo to expedite the disbursement of the compensation and payments for the land and buildings already inundated by the mudflow.

Speculation was rife that, in return for its support for the government's plan to increase fuel prices, the Golkar Party, chaired by Aburizal Bakrie, managed to insert provisions into the 2012 revised State Budget Law that BPLS would get more money and power.

With this revision, the funding allocated to the BPLS would increase to Rp 1.6 trillion, from the Rp 1.3 trillion initially allocated for this year.