Victims of the East Java mudflow disaster have reached a deal with the Bakrie family-controlled PT Minarak Lapindo Jaya and the government agency handling their case to settle a long outstanding compensation payout.

Victims’ representatives held lengthy talks Wednesday with the Sidoarjo Mudflow Mitigation Agency (BPLS) and Nirwan Bakrie, head of the Bakrie Group of companies, at the State Secretariat, finally agreeing to settle the remaining 80 percent of compensation through monthly installments of Rp 30 million (US$2,500) to each affected family.

The victims are residents of four villages — Renokenongo, Kedungbendo, Jatirejo and Siring — included in the map of affected areas as stipulated in a 2007 presidential decree. They have been in Jakarta since Monday to pressure the government over the delayed payments.

Following the meeting, Public Works Minister Djoko Kirmanto confirmed the three parties had reached an agreement, and blamed the current financial crisis for not allowing the outstanding payments to be settled at once.

“There should be no deadlock, because the families need this compensation. That is why we have agreed on this scheme. Each family will get Rp 30 million per month until the payments are settled,” Djoko said at a press conference at the presidential office.

“We will start disbursing the installments this month, with the period differing for each family depending on the due date of their rent.”

In addition to the Rp 30 million, the families are also entitled to Rp 2.5 million to allow them to extend their rent periods.

“We have settled the disputes over the compensation payments through this negotiation without violating the presidential regulation,” Nirwan said.

Earlier Wednesday, President Susilo Bambang Yudhoyono urged the three parties to settle the outstanding payments immediately.

“I feel inconvenienced by this problem. If we can resolve the Aceh issue, why can’t we resolve this?” the President said, referring to decades of separatist conflict in the country’s westernmost province.

After the three-party negotiations, Yudhoyono met with the victims’ representatives, including Kus Sulaksono, who said they had accepted the agreement despite initially demanding each family receive Rp 75 million to enable them to buy their own homes, with Lapindo only willing to pay Rp 15 million installments at first.

“We agree with the scheme, and after being convinced by the President that the current crisis has hampered the compensation payment, we understand,” Kus said.

The mudflow disaster, which engulfed four villages and hundreds of hectares of farmland, was fed by hot mud that began spewing from Lapindo’s gas exploration site on May 29, 2006.

In October, a meeting of renowned international geologists concluded the disaster was caused by Lapindo’s drilling activities.

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