Astral pins hope on municipal services agreement

Integrated poultry producer Astral Foods (Astral) is hoping that an agreement achieved recently between itself and various national government departments and leaders will finally bring an end to the ongoing financial losses at its operations in Mpumalanga’s Lekwa Local Municipality.

In a statement by Astral, the company said that it had recently successfully achieved a High Court order requiring National Treasury and the Department of Cooperative Governance and Traditional Affairs (COGTA) to urgently intervene in the Lekwa municipality’s consistent failure to adequately resolve major problems with its freshwater supply system and the provision of other basic municipal services.

“The impasse with the municipality with regard to water and electricity supply has had a major disruptive impact on Astral’s operations within Standerton [in the Lekwa Local Municipality].

“The situation, dating back to early 2018, […] forced Astral at the time to take legal action against the municipality […]. Through [a court order], the Lekwa [Local] Municipality was obliged to submit a longer-term plan indicating how and when it intended to repair and improve the municipal utility supply infrastructure. This plan, however, did not materialise,” the statement said.

Astral’s report for its financial year ended 30 September 2020 stated that, due to the significant water supply interruptions in the municipality, the company had been forced to invest R50 million in a reverse osmosis water treatment plant at its Standerton poultry processing facility.

This was in addition to the

R188 million in expenses that the company had incurred due to water and electricity supply interruptions across its South African operations in the 2019 and 2020 financial years. Lungi Mtshali, spokesperson for COGTA, told Farmer’s Weekly that while an agreement had been reached following round-table discussions between Astral and various government entities, the cementing of this as a High Court order would take place in the near future.

Astral’s statement said the recent agreement required the national government to prepare a financial recovery plan for the Lekwa Local Municipality.

The company would also be able to approach the High Court again for further relief should this prove necessary.

Astral’s CEO, Chris Schutte, said in the statement: “We confirm our full support to national government and [National] Treasury, and look forward to co-operating further in the interests of resolving the very serious issues currently being faced by the Lekwa [Local] Municipality, and the impact that this is having on our operations and the community living and working in the area.” – Lloyd Phillips

DISRUPTIONS TO WATER AND POWER SUPPLY IN STANDERTON HAVE HAD A SIGNIFICANT EFFECT ON ASTRAL’S OPERATIONS