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Chairman of South African utility Eskom steps down

By Olivia Kumwenda-Mtambo and Peroshni Govender
A man walks past electricity pylons as he returns from work in Soweto, outside Johannesburg May 15, 2012. REUTERS/Siphiwe Sibeko

By Olivia Kumwenda-Mtambo and Peroshni Govender

JOHANNESBURG (Reuters) - Eskom [ESCJ.UL] Chairman Zola Tsotsi has quit his post at the South African utility after growing criticism of his management, clearing the way, said a government source, for it to deal with the country's electricity crisis without distractions.

Tsotsi resigned on Monday night before the board could vote on removing him for acting improperly by suspending the group's chief executive and interfering in administrative issues.

"The board saw his interference as a distraction and wanted to remove him," the source said. "He saw the writing on the wall and resigned." Tsotsi could not be reached for comment.

The shake-up is the latest in a long line of ructions at the utility, which provides almost all the power to Africa's most advanced economy but is battling to keep the lights on amid a funding crunch.

Eskom's board said that with the departure of Tsotsi, the company could focus on its challenges and regain the confidence of its stakeholders.

"The board and the chairperson held a constructive discussion about charting a way forward for the power utility. Mr Tsotsi agreed to step down as a director and chairperson of the board," Eskom said in a statement.

Eskom has imposed regular power cuts this year to prevent the national grid from being overwhelmed, as it struggles with a backlog of maintenance on aging power stations while scrambling to bring much-delayed new ones online.

The utility's biggest union, the National Union of Mineworkers, said Tsotsi's resignation was long overdue and hoped it would bring stability.

The company's CEO, Tshediso Matona, and three other senior executives were suspended earlier this month while an inquiry was conducted into its operations. Tsotsi said at the time there was "nothing sinister" about the suspension.

Standard and Poor's has cut Eskom's credit rating to "junk" status, saying the suspensions had led to a loss of confidence in the utility's corporate governance.

Ben Ngubane, a current member of the board, has been appointed acting chairman. He will later on Tuesday inform Public Enterprises Minister Lynne Brown of the resignation and President Jacob Zuma's cabinet can either endorse Ngubane's position or appoint a new chair.

Matona has filed a complaint of unfair suspension with the national labour arbitrator. He was appointed in August last year and told Reuters days before his suspension that the utility was considering selling off some of its assets, including an employee home loan book, to shore up its balance sheet.