UPDATE: S.Africa's Eskom board votes to keep Tsotsi - CNBC Africa

UPDATE: S.Africa's Eskom board votes to keep Tsotsi

Southern Africa

by Reuters 0

Eskom's leadership crisis deepens as the board voted on Wednesday to keep Chairman Zola Tsotsi. PHOTO: GCIS

According to reports the board at Eskom voted against the removal of Chairman Zola Tsotsi.

The process deepened the leadership crisis at the power utility as chronic power cuts hobble South Africa's economy.

This is after it was reported earlier that the utility’s board would vote on Tsotsi’s future at the parastatal.

Meanwhile, Eskom’s media desk has allegedly also received a notice from suspended CEO Tshediso Matona that he would challenge his suspension in the labour court.

The chief executive is challenging his suspension this month by the firm's chairman, the national labour arbitrator said on Wednesday.

The Commission for Conciliation, Mediation and Arbitration (CCMA) said it had received a referral for "unfair suspension" from Motana, and that it was looking into his complaint. 

Minister of Public Enterprises Lynne Brown told parliament the power outages were costing the economy between $1.7 billion and $6.8 billion a month and that she was concerned about the management at the state-owned company.

(READ MORE: S.Africa says power cuts cost economy up to $6.8 bln/month

Eskom's board will hold a vote of no confidence in Tsotsi, a government source and a source at Eskom told Reuters. Brown said she had not been "formally informed" about Tsotsi's future.

(READ MORE: Eskom pulls the plug on CEO & top brass)

The powerful National Union of Mineworkers accused Tsotsi this week of interfering with the award of tenders.

If Tsotsi is ousted, he would become the latest casualty at the troubled power utility after its chief executive and three other senior executives were suspended earlier this month.

"I am very worried because Eskom is a strategic asset, all of our lives depend on it," Brown said.

The price of Eskom's bond expiring in 2023 rose on Wednesday, pushing the yield down three basis points.


Eskom has implemented regular power cuts this year to prevent the national grid being overwhelmed as South Africa faces its worst energy crisis since 2008.

Standard & Poor's downgraded Eskom's credit last week to "junk", saying it now regarded its management as 'weak', in another blow that will pile more costs onto its already creaking books in the form of higher interest rates.

(READ MORE: S&P lowers Eskom's ratings, cites negative outlook)

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.

Government has said its economic growth forecast for 2015 could halve to 1 percent because of power constraints.

Brown said power cuts were likely to persist for another two years but by 2020 an extra 10,000 megawatts would be added to the grid as new power plants were completed.

Eskom expects its long-delayed Medupi coal plant to start generating 800 megawatts of extra electricity by June or July, when it could become South Africa's first new power station to come online in 20 years.

(READ MORE: Medupi's Unit 6 produces its first power)

Workers at Medupi, however, embarked on a one day strike on Wednesday over poor living condition and pay, threatening to further hamper construction at the plant.

*Additional reporting by CNBC Africa