Eskom ‘Solid’ After Chairman Quits, South African Minister Says

Eskom Holdings SOC Ltd., the state utility that’s struggling to keep South Africa supplied with power, is on “solid ground” following the departure of Chairman Zola Tsotsi, Public Enterprises Minister Lynne Brown said.

Brown will lead a process to appoint a permanent replacement for Tsotsi, who left his post on March 30, her department said in an e-mailed statement Wednesday.

Tsotsi resigned after a dispute over the suspension of four managers including the chief executive officer on March 12. Standard & Poor’s lowered Eskom’s rating to junk this month after Tsotsi announced the suspensions and started a probe into the state of the business, including under-performance of generation plants, delays in starting up new facilities, high costs and cash-flow problems.

“I want to state unequivocally that Eskom is on solid ground,” Brown said in the statement. “It is my firm view that the board and the shareholder continue to act in the best interest of the company and the people of South Africa.”

Eskom, which supplies 95 percent of electricity used in Africa’s second-biggest economy, implemented almost-daily rolling blackouts in February due to supply shortages. The cuts are curbing economic growth, which at 1.5 percent last year was the slowest since a recession in 2009, as industrial and mining output is reined in and some new projects can’t get the electricity they need.

The utility renewed co-generation contracts for the delivery of 827 megawatts on Tuesday, she said. Sasol Ltd., the world’s biggest producer of motor fuel from coal, will provide Eskom with as many as 400 megawatts after the renewal of a supply agreement, Alex Anderson, spokesman for the Johannesburg-based company, said by phone.

Brown appointed Ben Ngubane as acting chairman on Tuesday.

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