Possible Lapindo Bankruptcy
Wednesday, 03 January, 2007 | 17:15 WIB

TEMPO Interactive, Sidoarjo: PT Lapindo Brantas Inc, a subsidiary of PT Energy Mega Persada Tbk., has indicated it could go bankrupt if the mudflow in Porong Subdistrict, Sidoarjo, continues.

“Our maximum ability is only in accordance with what the President ordered, that we are to provide Rp3.8 trillion funds. Beyond that, we will have to give up,” said Yusuf Martak, Vice President of Energi Mega Persada, after meeting with the representatives of mudflow victims from Tanggulangin Anggun Sejahtera Complex, at Sidoarjo Regency hall, yesterday (2/1).

Yusuf explained that this amount of funds was only compensation for houses and land of the residents in four villages: Siring, Renokenongo, Kedungbendo and Jatirejo.

Apart from these villages, “We haven't thought about seeking funding,” he said.

Yusuf stressed again that from a financial aspect, the company had only prepared Rp3.8 trillion in funds.

“If more, Lapindo might go bankrupt,” he said.

Yusuf emphasized that if Lapindo was forced to provide compensation to residents outside of these villages, Lapindo might not implement the same amount.

There is a possibility that the areas will be treated with compensation below the agreed amount: Rp1 million per square meter of land; Rp1.5 million for building and Rp120,000 for paddy field.

The continuing mudflows, according to Yusuf, were caused more by the failure of the National Team for Handling Mudflow in Sidoarjo in carrying out its duties.

He went on to say that the National Team should have not only handled social matters, but should also have been able to ensure that the mudflows did not spread.

ROHMAN TAUFIQ