Lapindo Brantas Inc has agreed to buy the land, buildings and rice fields affected by the Sidoarjo mudflow disaster for the prices demanded by their owners.
However, a legal watchdog present at Monday's announcement slammed the promise, saying it was not legally binding and was probably empty words.
The agreement was announced at the Sidoarjo regency administration by Yusuf M. Martak, the vice president of PT Energi Mega Persada (EMP) Tbk, which has 50 percent stake in Lapindo Brantas.
Yusuf was accompanied by Sidoarjo Regent Win Hendrarso, head of the mudflow disaster mitigation team Basuki Hadimulyono, Lapindo Brantas general manager Imam Pria Agustino, East Java Governor Imam Utomo and hundreds of mudflow victims.
"We will not leave Sidoarjo and we will pay in line with the victims' demands so as to make them happy," Yusuf said.
Lapindo has promised to buy houses for Rp 1 million (US$105.26) a square meter, other buildings at Rp 1.5 million a square meter, while rice paddy owners would receive Rp 120,000 a square meter.
"The price is above the sale value of the taxed properties." The payments would be made "within the next two years", Yusuf said.
However, Sidoarjo Legal Aid Institute manager Attoilah said the agreement had no legal foundation because no one had signed anything.
"One day, Lapindo will breach the agreement. People will find it difficult to sue Lapindo if the value of the compensation they receive is not in line with the agreement due to the absence of legal proof," he said.
Upon hearing Lapindo's announcement, hundreds of emotional mudflow victims cheered, while others shouted, "Long live Pak Win", referring to the Sidoarjo regent.
Several of the villagers had shaved their heads to protest the government and Lapindo's handling of the disaster.
Yusuf said Lapindo had also prepared 500 to 600 hectares of land to build houses for the mudflow victims.
"The Bakrie Group, which also deals with real estate development, will invest in the housing sector in Sidoarjo. The concept will be similar to the construction of the Kelapa Gading housing complex in East Jakarta. It will be named Sidoarjo Baru," he said.
Yusuf said a formula for the compensation was still being calculated by a survey team from the Surabaya Institute of Technology.
According to regency data, 3,940 houses in the Siring, Jatirejo, Renokenongo, Kedungbendo and Besuki villages have been affected by the mudflow. Huge swathes of sugar cane and rice paddies have also been submerged.
Lapindo has never been prosecuted by the government for the disaster, despite evidence surfacing that the company had caused the mudflow by flouting safety standards while prospecting for natural gas.
A police investigation into Lapindo management has mysteriously stalled.
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