JSE-listed poultry giant Astral Foods has taken government, including National Treasury, to court and won a landmark order to secure better service delivery at municipal level in the Standerton area, where it has one of its biggest processing facilities.
The group confirmed on Tuesday that the order was successfully obtained in the Pretoria High Court on Monday (April 12) due to “poor service delivery” from the Lekwa Local Municipality in Mpumalanga.
Astral, which is South Africa’s largest integrated poultry producer and owns chicken brands such as Festive, Goldi and Country Fair, described the level of service delivery in Lekwa as “untenable”.
The cash-strapped and mismanaged municipality has faced growing protests from both business and the local community over non-delivery of basic services, which has even resulted in sewage spills into the Vaal River.
“Astral decided to take extraordinary steps in launching legal proceedings against the provincial and national government to hold them accountable for the failures in municipal service delivery in Standerton,” the group noted in a statement on the matter.
“The impasse with the municipality with regards to water and electricity supply has had a major disruptive impact on Astral’s operations within Standerton. Unfortunately, the goings on have also negatively impacted on people living in the town and surrounding areas.”
Astral said the situation dates back to early 2018, when disintegrating infrastructure in the Lekwa municipality led to severe basic supply interruptions to Astral’s operations. This forced the group to take legal action against the municipality at the time, and a court order was secured.
“Through this [court order] the Lekwa municipality was obliged to submit a longer-term plan indicating how and when it intended repairing and improving the municipal utility supply infrastructure,” explained Astral. “This plan however did not materialise.”
National government to ‘intervene’
The group pointed out that in terms of the agreed high court order issued on Monday, national government will now intervene in the municipality and, together with Treasury, will prepare a financial recovery plan as per the Municipal Finance Management Act (56 of 2003).
“The order also provides for Astral to approach the court again for further relief, if it is of the view that the financial recovery plan is not being implemented,” it said.
“Astral is very hopeful that this will not be necessary and that the parties will instead work together to turn the situation around in the interests of all stakeholders,” the group added.
“We confirm our full support to National Government and Treasury and look forward to co-operating further in the interests of resolving the very serious issues currently being faced by the Lekwa municipality,” said Astral CEO Chris Schutte.