Matjhabeng Local Municipality, governing the former goldfields towns of Welkom, Virginia, Odendaalsrus, and Hennenman in the Free State, has accumulated an astonishing R14 billion in total debt — making it one of the most indebted municipalities in South Africa. The debt is a combination of unpaid Eskom accounts (over R3 billion), water board arrears, unpaid creditors, and accumulated losses from decades of financial mismanagement.
One emblematic case: R7.2 million was paid for the construction of a "flood dam" that was never built. No dam exists at the site. No construction ever took place. The money simply disappeared. This phantom project is representative of a broader pattern where payments are made for services, infrastructure, and goods that never materialise.
Of the municipality's 13 wastewater treatment works, only 3 are operational. The remaining 10 have broken down, been vandalised, or lack the chemicals and electricity needed to function. Raw sewage flows directly into rivers and streams, contaminating water sources and creating a public health hazard. The Sand River, which flows through the area, has been described as an open sewer.
Eskom regularly threatens to cut electricity to the municipality over the R3 billion+ arrears — a threat that, if executed, would leave hundreds of thousands without power. The municipality cannot collect enough revenue to service its debt, let alone invest in infrastructure. Property values have collapsed. Businesses have relocated. The once-prosperous mining town of Welkom has become a symbol of the Free State's municipal governance crisis.