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Sidoarjo, East Java. Five years since a torrent of hot mud engulfed thousands of homes in Sidoarjo, East Java, villagers are still waiting for the damage payments promised to them.

“This is unacceptable,” said Abdul Fatah, the owner of a school destroyed by the mud and one of hundreds of residents who gathered in Porong subdistrict on Sunday to mark the anniversary of the May 2006 disaster.

“This mudflow has been going on for five years now, but our claims remain unpaid,” he said.

Fatah said Lapindo Brantas — the Bakrie Group subsidiary blamed for the gush that followed the blowout of one of its natural gas wells — had only paid him Rp 400 million ($47,000) of his Rp 1.5 billion payout.

He said the company had violated the law by delaying the payments to him and around 11,000 families entitled to property-damage compensation.

“Under a presidential decree, we were supposed to receive the money in two stages — first 20 percent, then 80 percent,” he said. “That 80 percent was supposed to be paid in cash up front, not in installments.”

“By allowing Lapindo to [pay in installments], the state is breaking the very law that it set down,” Fatah added.

Every month Lapindo failed to follow through on its promise, he said, hope faded for his dream to build a new Islamic school.

Saman, a resident of Jatirejo village, said the trickling monthly payments were delayed.

He said payouts had stopped coming in the four months since January and only resumed earlier this month.

Saman said he had joined members of the Sidoarjo district legislature in pushing the central government to provide a loan to Lapindo so that it could complete its payments, but the state did not respond to the demand.

Diaz Raichan, a spokesman for Lapindo, has assured residents the compensation process was still ongoing.

“We expect to pay them off in full by the middle of 2012,” he said last week.

The mudflow has destroyed hundreds of homes, swamped 720 hectares of land and displaced thousands of people since it began erupting just 200 meters from the mouth of the ruptured Lapindo gas well.

While most scientists agree the disaster was caused by an explosion at the well, Lapindo and the government have laid the blame on an earthquake that struck days before the mudflow, about 280 kilometers away. This theory has been dismissed for lack of evidence by many experts studying the mud volcano.

Shortly after the disaster, President Susilo Bambang Yudhoyono ordered the company to pay about $400 million for mud containment efforts and compensation to those affected.

Lapindo is partly owned by the family of Golkar Party chairman Aburizal Bakrie, who at the time of the eruption was the coordinating minister for the people’s welfare.

On Sunday’s anniversary, residents held a mass prayer and hung banners calling for full compensation to be paid immediately by Lapindo.

They also called for the government and Lapindo to compensate around 45 families whose homes were destroyed by the mudflow but who were not officially recognized as living in the disaster zone.