Embattled Astral Foods yesterday successfully interdicted power utility Eskom from cutting the bulk supply of electricity to its Meadow Feeds business in the Rand West Local Municipality pending the outcome of a review the poultry producer planned to launch next year.
Astral Feed managing director Michael Schmitz said the group decided to approach the South Gauteng High Court as the disconnection of the electricity supply would have catastrophic consequences on businesses in the municipality. Schmitz said Eskom wanted to cut the electricity despite written representations made by Astral setting out the reasons why the disconnection should not continue. “In the circumstances, Astral was left with no alternative but to approach the court for relief,” Schmitz said.
Last month, Astral said that its earnings fell 55 percent during the year to end September despite feed sales declining 3.3 percent. The group said its total dividend for the year fell 56 percent compared to last year’s R20.50, leaving shareholders with R9, after having declared a final dividend of R4.25 for 2019. The group said it incurred more than R120 million in costs relating to operational challenges caused by water supply constraints from the deterioration of infrastructure in Lekwa Municipality, which supplies its processing plant in Standerton. Astral said severe water supply interruptions at Goldi, its largest poultry processing facility based in Standerton, under the Lekwa Municipal District, as well as Eskom electricity interruptions, had marred what could have been a good year for the group.
Schmitz said Astral decided to launch an urgent interdict after Eskom issued a public notice in October to exercise its right to disconnect the supply of electricity to the Rand West Municipality.
The disconnections were expected to commence last Wednesday (November 27) due to the non-payment of electricity by the municipality. Astral chief executive Chris Schutte said his company was happy that acting Judge Gerry Nel understood that the group should not be penalised for the inefficiencies and corruption prevalent within the local municipalities.
Schutte said the interruption of electricity to its animal feed mill was not justified as its electricity payments were up to date. “The continued dependency on Eskom remains unhealthy and its repeated threats to interrupt supply has a profound effect on businesses such as Astral,” Schutte said. Schutte said that the interruption of electricity supply would affect its businesses as well as investment and growth opportunities. “It is unacceptable that big businesses are having to take over the responsibility of protecting the interests of all paying customers as Eskom persists with the irrational idea of terminating the electricity supply to the manufacturing sector that are both good corporate citizens and contribute significantly to job creation, while the current impasse is between two state entities,” Schutte said. Astral Foods closed 0.25 percent higher at R201.50 on the JSE yesterday
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