Thousands of mudflow victims staged a protest in Sidoarjo, East Java, on Wednesday, demanding the government to provide a bailout fund.

The fund is meant for the compensation owed them for their assets damaged in the Lapindo mudflow disaster.

The protesters left their temporary shelters at Porong Baru Market in Porong district, carrying banners and handing out pamphlets as they moved in a long convoy of trucks, pickup trucks and motorcycles. Sporting a police escort, they made their way to a gathering of legislative and independent presidential candidates at Delta Sports Stadium in Sidoarjo.

"We are demanding the government provide a bailout fund to pay the mudflow victims their compensation, because Lapindo Brantas Inc. is facing financial difficulties paying its dues to the victims," said rally coordinator Suwito, referring to the gas exploration company widely considered responsible for the disaster.

He added the fund was expected to help out thousands of people made homeless and "deprived of their human basic rights" for the past three years, as well as to save the government and Lapindo, which have come under fire for the protracted payout, further embarrassment.

Energy and Mineral Resources Minister Purnomo Yusgiantoro has proposed a bailout plan to help the people and industries affected by the mudflow disaster that started in May 2006.

The proposal has received the support of the House of Representatives, which has set up an interparty team to monitor its implementation.

The mudflow victims have long been disappointed with President Susilo Bambang Yudhoyono's government, which is perceived as toothless in putting pressure on chief welfare minister Aburizal Bakrie and his family - Lapindo's main stakeholders.

The government is also considered to have neglected thousands of people who lost their homes and other assets to the rising sea of mud. the victims have finally accepted Presidential Decree No. 14/2007 on the compensation scheme and resettlement, there is no certainty about their future, because out of 465 packets of asset procurement deals accepted by Lapindo, only 150 were settled last December, while the rest have been suspended," Suwito said.

He added the victims needed more than of Rp 7.5 billion (US$675,900) to build new homes in a nearby location.

Lapindo has suspended paying the remaining 80 percent of compensation as required by the decree, blaming the global economic downturn that has adversely affected parent company Bakrie & Brothers Holding Group in the capital market.

The government has also suspended paying compensation to residents of four other villages hit by the extended mudflow in February 2008.

Elsewhere, a mudflow accident occurred last week at a drilling site owned by a Pertamina and PetroChina joint operation, in Sekarkurung village in Gresik regency, raising unrest and fears of safety among villagers.

Priyo Agus Trinugroho, drilling manager at the national oil and gas regulating body (BPMigas), said earlier this week the new mudflow began last Thursday and was believed to have stemmed from nearby wells that were last drilled during the Dutch colonial era.

However, he pointed out the new leak was not as intensive as in Porong and could be halted within the coming days.

Residents have called on the government to take quick steps to prevent the problem escalating into a second mudflow disaster. residents will never feel safe unless the mud leak is stopped," said Sekarkurung village head Junaidi, as quoted by Antara news agency.

He stressed the villagers were not eyeing hefty compensation payouts, but were seeking safety guarantees from the oil companies and the government.

"The government should disseminate information on the mudflow and make sure both Pertamina and PetroChina are working to stop it," he said.

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