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UPDATE 2-S.Africa's Eskom CEO suspended during inquiry into struggling firm
March 12, 2015 / 10:02 AM / 3 years ago

UPDATE 2-S.Africa's Eskom CEO suspended during inquiry into struggling firm

* CEO one of four senior executives sidelined

* Eskom provides almost all of S.Africa’s power

* Utility struggling to keep the lights on (Adds quotes, background)

By Peroshni Govender

JOHANNESBURG, March 12 (Reuters) - The chief executive of South Africa’s power company Eskom has been suspended while an inquiry is held into the operations of the troubled utility, its chairman said on Thursday.

Eskom, which provides virtually all the electricity in Africa’s most developed economy, is facing a funding crunch as it races to bring new power plants online and has had to stage power cuts to prevent the grid from being overwhelmed.

Chairman Zola Tsotsi stressed that there was “nothing sinister” about the temporary suspension of CEO Tshediso Matona and three other executives. Matona was appointed only in August last year to head the state-owned utility.

“To ensure that this process is as transparent and uninhibited as possible, the board has also resolved that four of its senior executives, including the chief executive, should step down for the duration of this enquiry,” Tsotsi said, adding that the probe into Eskom’s problems should take three months.

Zethembe Khoza, an Eskom non-executive board member and former managing executive at South Africa’s Telkom will assume the position of interim chief executive, said Tsotsi.

The chairman said the independent probe would look at a number of the challenges facing the utility, citing “poor performance of generation,” delays in building new plants, and cash flow issues

Eskon said the inquiry would be conducted by “external parties, who will be selected within the next week”.

Last week Matona told Reuters the cash-strapped utility might sell some of its assets to raise capital, including a home loan book for its employees.

The National Union of Mineworkers (NUM), which claims about 16,000 members out of around 46,000 employees at Eskom, said it would oppose any attempt to sell assets, especially its finance company which helps provide home loans to employees.

Eskom’s funding gap to 2018 is estimated at 200 billion rand ($16 billion) and it is getting a 23 billion rand cash injection from the government this year.

Weary South Africans are subjected to frequent blackouts, and the government has said its economic growth forecast for 2015 could halve to 1 percent because of power constraints.

$1 = 12.1814 rand Additional reporting by Tiisetse Motsoeneng; Writing by Stella Mapenzauswa and Ed Stoddard; Editing by James Macharia and Keith Weir

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