Thousands of heavily armed protesters took to the streets, looting shops, damaging railway lines, burning trucks, destroying ATMs, wrecking petrol stations and preventing children from going to school.

The protests entered their second day yesterday.

The police are heavily outnumbered and the violence has spread to the neighbouring towns of Deneysville and Orangeville, stretching police resources even further.

Residents of Sasolburg's Zamdela township took to the streets on Sunday in protest at proposals to incorporate Sasolburg into neighbouring Parys, whose Ngwathe local municipality would run the industrial town.

Municipalities such as Matatiele, Khutsong, Bushbuckridge and Siyathemba, near Balfour, have been sites of protests, with contested demarcation decisions cited as the biggest complaint.

Journalists and motorists have been threatened by the protesters.

The police fired live ammunition when demonstrators, who repeatedly tried to force their way into the town's business district, opened fire on them with handguns and home-made firearms.

Shops were shut throughout the day as teachers from the town's suburbs and township turned away thousands of pupils for their own safety.

As angry Zamdela residents erected burning barricades and stoned delivery vehicles trying to enter the township, residents of the town formed patrols and stopped and searched people they suspected of planning attacks on businesses in the town centre.

Mpho Ndlovu, carrying bags containing alcohol looted from Zio wholesalers, said: "People want to treat us like animals. They think we are stupid, but we are not. We will make this town and other towns fall apart."

Asked why they were looting shops if their anger was directed at the municipality, Ndlovu said: "Because we can. We are not stealing we are taking ... the government will replace this stuff anyway and I need stuff like beer.

"The government must know that if they do not give us what we want we will make this province ungovernable. No one will ever work here again. No child will ever go to school here again. We will burn and destroy everything," she said.

Co-operative Governance Minister Richard Baloyi was expected to meet officials of the Fezile Dabi municipality - under which Sasolburg currently falls - yesterday afternoon to discuss the protesters' grievances.

The chairman of the Sasolburg Chamber of Commerce, Jacques Stoltz, described it as a sad day for the town.

"The town centre is closed down and not only have many of our members been hit by the plundering but they will probably lose income in the days ahead as shops and businesses stay shut," he said.

With the police incapable of stopping the protesters, they looted a wholesaler directly outside Zamdela police station, petrol bombing one of the store's delivery trucks and destroying a nearby Standard Bank ATM.

Officers, armed with shotguns and riot shields, sat passively in parked Nyalas as looters helped themselves to bags of cement, wood and corrugated iron.

"No one can stop us. We rule this town.

"The police can send many more armoured cars and pigs [police] - we will kill and destroy them all.

"We have guns and are not afraid to shoot ... just look at the police van we shot at today," said Henry Tshabalala.

Police eventually reacted, chasing off the protesters when several of them opened fire on officers.

Constable Peter Kareli, a police spokesman, said three officers had been injured in the protests.

"The situation is extremely volatile ... the violence is spreading, with Orangeville and Deneysville police reporting incidents of sporadic violence.

"Though we are confident that we will regain control, we had to call in large numbers of reinforcements from Gauteng and Welkom because the violence is escalating rapidly.

"We confirm that we fired live ammunition at protesters but that was because many shot at police," Kareli said.

Zamdela community leader Gab Mokwena said the community condemned the violence and the shutting down of schools but it could not be held responsible.

"The government was meant to tell us what was going to happen and not just make unilateral decisions. Parys has non-existent services, poor water and sanitation systems, no housing policies and huge debt, and now the Free State government wants us to be governed by them.

"We will not allow this to happen ... we have our own problems and do not want other towns' problems because ours will never be solved," he said.

Stoltz said there had not previously been antipathy between local businesses and the community.

"Though we don't support the violence, we agree in principle with the reason for the protests. We also don't want the two municipalities to merge."

He said Sasolburg had many reliable ratepayers whereas Parys was bankrupt. A merger would mean that Sasolburg's residents and businesses would subsidise Parys.

A storm ripped through Sasolburg on New Year's Day and levelled a number of shacks in Zamdela, injuring about 100 people and leaving at least one woman dead.

Alex Anderson, spokesman for Sasol, said its operations were not affected by the anarchy in Sasolburg but the protests had affected staff and contractors.

"Many of our staff are from Sasolburg and a number were unable to get to work safely today. There have been widespread reports of intimidation and many of our staff were sent home," said Anderson.

Sasol is one of the five biggest companies on the JSE. A producer of mining chemicals, fertiliser, explosives, tar and gases, it has its origins near the town and Sasolburg was established in 1954 to provide housing and support services for the Sasol plant.

Sasol is now extremely diversified with large interests in the Middle East, Asia, Germany, Canada and the US.

Senne Bogatsu, spokesman for the Free State department of co-operative governance and traditional affairs, said: "Provincial government officials will meet residents and their leaders.''- Additional reporting by TJ Strydom