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Govt mulls new options to collect debt payment from Bakrie's Lapindo

Jakarta Post - December 4, 2020

Adrian Wail Akhlas, Jakarta – The government is considering several ways to collect the Rp 773.8 billion (US$54.86 million) loan made by oil and gas company Lapindo Brantas Inc. and subsidiary PT Minarak Lapindo Jaya in the aftermath of the 2006 mudflow disaster in Sidoarjo, East Java.

Finance Ministry state assets director general Isa Rachmatarwata said the companies had asked the government whether they could pay the debt in the form of physical assets.

"We will evaluate their offers and assess the assets' value. If the value is enough to cover for the debt, we will take it. Otherwise, we will ask for cash payments," he told a virtual press briefing on Friday.

In 2006, a mudflow occurred because of flawed drilling activities by Lapindo in Sidoarjo. Some 10,000 people from four villages were directly affected by the disaster and were subsequently displaced from their homes. A 2018 report by The Jakarta Post pointed out that the incident had worsened people's health as some suffered respiratory problems while others developed cancer.

One year after the incident, Lapindo Brantas and Minarak Lapindo Jaya, controlled by businessman and former Golkar party chairman Aburizal Bakrie's family, made a loan worth Rp 781 billion, including Rp 773.8 billion from the government, to deal with the fallout. The government provided the fund to Minarak Lapindo Jaya, which was tasked with paying compensation to the mudflow victims.

Both companies, however, defaulted on the loan and only paid Rp 5 billion of the Rp 773.8 billion debt.

The Supreme Audit Agency (BPK), meanwhile, has requested that both entities pay Rp 1.9 trillion, which includes the main debt, interests and fines. The ministry was currently working with the BPK to collect the debts, Isa said.

"We will start to take action after we conclude the discussion with the BPK," he stated. "We are currently asking for a cash payment as the first option."

Source: https://www.thejakartapost.com/news/2020/12/04/govt-mulls-new-options-to-collect-debt-payment-from-bakries-lapindo.htm