JAKARTA. The government has decided to help PT Minarak Lapindo Jaya, the unit of a holding group belonging to business tycoon Aburizal Bakrie, pay the latter’s obligation of Rp 781 billion in compensation to Lapindo mudflow victims in Sidoarjo, East Java.

Minister of Public Works and Housing Basuki Hadimoeljono said after a limited cabinet meeting at the State Palace on Monday that the government and Lapindo would sign an agreement before the funds were disbursed on June 26, 2015.

Beforehand, the President would issue a presidential regulation stipulating that Lapindo would pay compensation to the government within four years with an interest rate of 4.8 percent per year.

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The government will not impose a tax on Lapindo in this case.

Basuki said that all mudflow victims had been ready to receive the compensation funds and they had already opened bank accounts at BRI.

Kompas.com reported the compensation would be handled by the Sidoarjo Mudflow Handling Agency in accordance with the company’s recommendation. Lapindo has offered asset worth Rp 3.3 trillion as a guarantee on the government’s funds.

Hundreds of families have been displaced and took refuge after their homes and land were affected by the mudflow, which allegedly began at the mining site of Lapindo Brantas Inc. in Sidoarjo on May 29, 2006. (rms)