January 10, 2020 / 6:13 PM / 2 months ago

UPDATE 2-Chairman of South Africa's Eskom quits after holiday power cuts

* Ramaphosa under pressure over Eskom crisis

* Escalating power cuts stifle economic growth

* Mabuza chaired board of directors for two years

* Financial decline continued on his watch (Adds Ramaphosa, analyst, context)

By Alexander Winning and Emma Rumney

JOHANNESBURG, Jan 10 (Reuters) - The chairman of struggling state-owned South African utility Eskom resigned on Friday after failing to avert power cuts over the Christmas and New Year public holidays.

President Cyril Ramaphosa’s office said the government would soon announce a reconfigured Eskom board of directors with a mixture of experience in the electricity industry, engineering and corporate governance.

Jabu Mabuza’s resignation comes after Eskom implemented severe nationwide power cuts in several bursts last year and sporadically this week despite low electricity demand when many businesses and factories were closed for the holidays.

The power cuts have pushed Africa’s most industrialised economy to the brink of recession and piled pressure on Ramaphosa, who came to power with a pledge to revive investor confidence and lift economic growth.

Eskom officials told Ramaphosa at the company’s headquarters in Johannesburg last month that there would be no power cuts from mid-December until mid-January. Ramaphosa then told journalists that there needed to be greater accountability for Eskom’s failings.

The company supplies more than 90% of South Africa’s power, but its creaking fleet of coal-fired plants struggle to meet electricity demand.

At 1830 local time (1630 GMT) more than 12,700 megawatts (MW) of its 44,000 MW nominal generating capacity were offline because of plant breakdowns.

Eskom executives have blamed a lack of critical mid-life maintenance under previous management and analysts say the government needs to procure more generating capacity fast.

RECRUITMENT CONCERN

Ramaphosa told members of his African National Congress (ANC) party at an event to mark the governing party’s 108th anniversary that Mabuza’s departure was a “sad moment”.

“Addressing and overcoming the crisis at Eskom necessitates that the board be strengthened,” an ANC statement said.

Peter Attard Montalto, head of capital markets research at Intellidex, said the chairman’s sudden departure was a concern.

“It is far from clear who a replacement would be, given so many suitable people don’t want the job,” he said.

Mabuza was appointed to lead the Eskom board shortly after Ramaphosa won the ANC leadership in December 2017.

His appointment was intended to help to halt a financial and operational crisis. But under his watch the company’s debts climbed to more than 450 billion rand ($31 billion) and power cuts escalated.

Mabuza’s resignation follows that of Phakamani Hadebe as chief executive last year. Hadebe cited health reasons for his decision to leave, but sources told Reuters at the time that he also felt frustrated at being excluded from important decisions affecting the utility.

Eskom’s new CEO, Andre de Ruyter, took up his post this week and will oversee a government plan to split the company into three units to make it more efficient.

The company said on Friday that power cuts would stop at 11pm on Friday before resuming at 9am on Saturday. ($1 = 14.3109 rand) (Additional reporting by Olivia Kumwenda-Mtambo Editing by Frances Kerry and David Goodman)

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