Indonesia's President, Energy Firm Sued for Mud Flow

A leading Indonesian environmental group has sued an energy firm and President Susilo Bambang Yudhoyono over a mud volcano that has displaced more than 10,000 people in Java, its chairman said on Tuesday.

The torrent of hot mud has been flowing since an oil drilling accident in May and has inundated entire villages in Sidoarjo, an industrial suburb of East Java's Surabaya, Indonesia's second-largest city.

Numerous attempts to cap or curb the flow have failed and it has become a political and environmental issue, with the government under fire from critics for what they say were lax safety standards behind the accident and for not doing enough to resolve the situation.

Environmental watchdog Walhi filed the suit in a Jakarta court on Monday and named the company blamed for the mudflow, PT Lapindo Brantas, its partners, Yudhoyono and other local officials as defendants, said the group's chairman, Chalid Muhammad.

"The mud flow has damaged the local ecosystem and removed residents from their villages. The current effort is not effective and its funding is controlled by Lapindo," he told Reuters. The suit demanded that Yudhoyono require Lapindo and its partners to bear all the costs for stopping the mud flow, compensating victims and restoring the environment.

Lapindo and PT Energi Mega Persada, which indirectly controls it, dispute whether the mud flow was caused by the drilling and also whether Lapindo alone should shoulder the cost. Energi is owned by the Bakrie Group, controlled by the family of Indonesia's chief social welfare minister, Aburizal Bakrie.

Lapindo holds a 50% stake in the Brantas block from where the mud is gushing. Energi International holds 32% and Australia-based Santos the remaining 18%. Yudhoyono said in December that Lapindo would have to pay $420 million to victims and for efforts to stop the mud.

Lapindo has agreed to pay 2.5 million rupiah ($276.5) per square metre for swamped land and damaged buildings, and 120,000 rupiah per square meter for inundated rice fields.

The suit also demanded the president set up a team with more powers to investigate the disaster and mobilize expertise to stop it, the environment group said. The court has not set a date for the first hearing.