Indra Harsaputra, Sidoarjo – Bowing to public pressure, the company at the heart of the mudflow disaster in Sidoarjo, East Java, has decided to buy all land and buildings affected by the disaster.
Lapindo Brantas Inc. made the decision after a four-hour closed-door meeting with 16 representatives of the affected residents, as well as the executive chairman of the national team in charge of dealing with the disaster, Basuki Hadimulyono, and Sidoarjo Regent Win Hendrarso.
In the meeting, which was tightly guarded by a troop from the police paramilitary unit Brimob, the company did not provide details of the purchase or the amounts to be paid for the affected land and buildings.
Since May 29, when hot mud began gushing out of the company's gas exploration site, 2,284 houses in five villages have been inundated. In addition, 64 hectares of sugarcane plantations and almost 300 hectares of rice fields have been flooded.
The mud has forced the central government to close the key Surabaya-Gempol turnpike indefinitely. Last Wednesday, a gas pipeline explosion at the site killed 12 and injured dozens of others.
During the Friday negotiations, the affected residents demanded Lapindo buy their land and homes at a price of Rp 1.5 million (US$164) per square meter for buildings and Rp 1 million for residential land. They requested Rp 120,000 per square meter of flooded rice fields. Lapindo suggested payments of Rp 1,250,000 for buildings, Rp 500,000 for land and Rp 90,000 for rice fields.
"The prices proposed by Lapindo were firmly rejected by representatives of residents, who said they'd rather be shot by the armed security personnel guarding the meeting if their demands were turned down," said Win Hendrarso while meeting with hundreds of residents who were waiting outside.
He said Lapindo had asked for an extension to allow it to discuss the amounts demanded by residents with the company's shareholders, but had given assurances that 75 percent would agree to the amounts proposed by residents.
"I and Pak Imam Agustino (Lapindo's general manager) will talk with the company's shareholders... We will try hard to make them agree," Win promised.
Lapindo owns 50 percent of the gas block. Lapindo is owned by PT Energi Mega Persada through Kalila Energy Ltd. and Pan Asia Enterprises Ltd. The other half of the gas block is owned by PT Medco Energi Internasional and Santos, with 32 percent and 18 percent of the shares, respectively.
In Jakarta, Vice President Jusuf Kalla said Friday that Lapindo should write a letter expressing its readiness to carry out its agreement with the affected residents, but added that any financial compensation must be appraised to conform with market prices.
"It would be even better if Lapindo paid the victims 10 percent to 20 percent more than the normal price to give the victims a boost in starting new lives," Kalla said.
Imam Agustino said the company's proposed amounts were 20 percent higher the value of taxable property, which ranges from Rp 200,000 to Rp 300,000 per square meter.
"What can we say, the residents want more than we can afford. But this is a show of Lapindo's social responsibility to the mudflow victims," he said.
The company, he said, would provide more details Monday after it gained approval from its shareholders.
[Tony Hotland contributed to the story from Jakarta.]