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Knysna Municipality mayor, Georlene Wolmarans, says the opening of the upgraded waste water treatment works is a major infrastructure milestone for the town.
The R48.4 million facility was officially opened on Friday.
Mayor Wolmarans says Knysna has grown substantially over the past decade but she said the infrastructure had failed to keep up.
Matters came to ahead in September 2011 when a large amount of sewerage washed into the lagoon, polluting important swimming and recreational areas.
Wolmarans says the improvement of the treatment works forms part of on-going, project-orientated Lagoon Action Plan, which aims to address several major factors related to water quality and not just sewerage.